SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-----------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 4, 1997
BEACON PROPERTIES CORPORATION
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-12926 04-3224258
(Commission File Number) (IRS Employer Id. Number)
50 Rowes Wharf
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
(617) 330-1400
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
225 Franklin Street. On June 4, 1997, Beacon Properties Corporation (the
"Company") acquired 225 Franklin Street located in downtown Boston,
Massachusetts, from Hexalon Real Estate, Inc. for aggregate consideration of
approximately $280 million in cash of which $204 million was provided by a draw
on the Credit Facility and $71 million of which are the proceeds of the
Company's recent sale of the Westlakes Office Park. The Company estimates that
the aggregate purchase price for 225 Franklin Street is approximately 85% of
replacement cost. The Company and its affiliates are not related to any of the
other parties to this transaction.
The 225 Franklin Street Property was built in 1966 and consists of
approximately 929,545 square feet of office space in a 33-story tower. The 225
Franklin Street Property has undergone an approximately $95 million renovation
during the past eight years, including installation of a new electrical system,
and a complete upgrade of mechanical systems, elevators, lobbies, roofs and the
exterior plaza of the building. Major tenants in 225 Franklin Street include
State Street Bank & Trust Company (approximately 501,000 square feet), Arthur
Andersen & Co. (approximately 98,000 square feet), and AEW Capital
(approximately 75,000 square feet). At March 31, 1997, the occupancy rate for
225 Franklin Street was approximately 95%.
The Company based its determination of the price to be paid on the
expected cash flow, physical condition, location, competitive advantages,
existing tenancy and opportunities to retain and attract additional tenants. The
Company did not obtain an independent appraisal on the Property.
Item 5. Other Events
On June 4, 1997, the Company filed a prospectus supplement to its Form
S-3 Registration Statement (No. 333-21787) with the Securities and Exchange
Commission pursuant to which it proposes to offer 6,000,000 shares of Series A
Cumulative Redeemable Preferred Stock.
Item 7. Financial Statements and Exhibits
(a) Financial Statements Under Rule 3-14 of Regulation S-X
Statement of Excess of Revenues over Specific Operating Expenses of 225
Franklin Street in Boston, Massachusetts for the year ended December
31, 1996 and (unaudited) for the three months ended March 31, 1997.
(b) Pro Forma Financial Statements
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997
(Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Three
Months Ended March 31, 1997 (Unaudited)
(c) Exhibits
*1.1 Underwriting Agreement between the Company and Merrill Lynch &
Co. dated June __, 1997.
2.1 Purchase and Sale Agreement between Hexalon Real Estate, Inc.
and SSB Realty, Inc. dated as of May 22, 1997.
2.2 Memorandum of Agreement between SSB Realty, Inc. and Beacon
Properties, L.P., dated as of April 16, 1997.
2.3 Second Amendment to Memorandum of Agreement between SSB Realty,
Inc. and Beacon Properties, L.P., dated June 3, 1997
(superceding the Amendment to Memorandum of Agreement).
2.4 Letter Agreement between Beacon Properties, L.P. and SSB Realty,
Inc., dated as of April 16, 1997.
23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants.
---------------
* To be filed by amendment.
2
<PAGE>
BEACON PROPERTIES CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEACON PROPERTIES CORPORATION
/s/ Robert J. Perriello
-----------------------------------
Robert J. Perriello
Senior Vice President
and Chief Financial Officer
Date: June 4, 1997
3
<PAGE>
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of 225 Franklin Street in Boston, Massachusetts (the
"Property") for the year ended December 31, 1996. This financial statement is
the responsibility of Beacon Properties Corporation's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Property after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of 225 Franklin Street in
Boston, Massachusetts for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
May 29, 1997
F-2
<PAGE>
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Year For the Three
Ended Months Ended
December 31, 1996 March 31, 1997
----------------- --------------
(Unaudited)
<S> <C> <C>
Revenues:
Base rent $24,171,715 $ 6,727,809
Recoveries from tenants 5,526,823 1,321,475
Other income 1,230,118 89,731
----------- -----------
30,928,656 8,139,015
----------- -----------
Specific operating expenses (Note 2):
Utilities 1,226,621 389,319
Janitorial and cleaning 845,436 235,719
Heating, ventilation and air conditioning 1,138,787 280,952
General and administrative 843,821 201,066
Repairs and maintenance 1,637,636 341,749
Insurance 244,437 10,259
Property taxes 3,846,365 921,669
----------- -----------
9,783,103 2,380,733
----------- -----------
Excess of revenues over specific operating expenses $21,145,553 $ 5,758,282
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-3
<PAGE>
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
225 Franklin Street (the "Property") is an office complex located in Boston,
Massachusetts encompassing approximately 930,000 square feet. Beacon Properties
Corporation intends to acquire the entire fee interest in the Property.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of the
related leases. The excess of recognized rentals over amounts due pursuant to
lease terms is recorded as accrued rent. The impact of the straight-line rent
adjustment increased revenues by approximately $2,845,000 for the year ended
December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses not
comparable to the operations of the property after acquisition, such as interest
income, management fees, depreciation, amortization, and interest expense.
Continued
F-4
<PAGE>
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with terms
that vary in length. Certain of the leases contain real estate tax reimbursement
clauses, operating expense reimbursement clauses and renewal options. Minimum
lease payments to be received during the next five years for noncancelable
operating leases in effect at December 31, 1996 are approximately as follows:
Year Ending December 31,
------------------------
1997 $23,304,000
1998 25,256,000
1999 25,759,000
2000 24,350,000
2001 23,626,000
As of December 31, 1996, three tenants occupied approximately 68% of leaseable
square feet and represented 90% of total base revenues.
F-5
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma Condensed Consolidated Balance Sheet of
Beacon Properties Corporation (the "Company") as of March 31, 1997, is presented
as if the 10880 Wilshire Boulevard, Centerpointe, Westbrook Corporate Center,
175 Wyman Street and 225 Franklin Street properties had been acquired as of
March 31, 1997. Additionally, the Company's April 1997, 7,000,000 share, common
stock offering ($32.125 per share) and related repayment of the Credit Facility
and the sale of Westlakes Office Park are presented as if they occurred as of
March 31, 1997. Finally, the Company's proposed 6,000,000 share 9 1/8% Series A
Cumulative Redeemable Preferred Stock Offering at $25.00 per share and related
repayment of the Credit Facility is reflected as if it had occurred as of
March 31, 1997.
The pro forma Condensed Consolidated Statements of Operations for the
year ended December 31, 1996 and three months ended March 31, 1997 are presented
as if the acquisition of the Properties acquired from January 1, 1996 to March
31, 1997 (as more fully described below), the closing of the MetLife Mortgage
loan, the Company's common stock offerings from January 1996 to April 1997 (as
more fully described below) and the Company's proposed 9 1/8% Series A
Cumulative Redeemable Preferred Stock Offering at $25.00 per share had occurred
as of January 1, 1996. Furthermore, the Company qualified as a REIT, distributed
all of its taxable income and, therefore, incurred no income tax expense during
the period.
In management's opinion, all adjustments necessary to reflect the above
discussed transactions have been made. The unaudited pro forma Condensed
Consolidated Balance Sheet and Statement of Operations are not necessarily
indicative of what actual results of operations of the Company would have been
for the period, nor does it purport to represent the Company's results of
operations for future periods.
Acquisitions included in pro forma:
<TABLE>
<CAPTION>
Rentable Year Built/ Date of
Property Name Location Sq Ft Renovated Acquisition
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 Acquisitions
Perimeter Center Atlanta, GA 3,302,000 1970-1989 02/15/96
New York Life Portfolio Chicago, IL and Washington, D.C. 1,012,000 1984-1986 08/16/96
Fairfax County Portfolio McLean, VA and Herndon, VA 550,000 1981-1988 09/05/96
Rosslyn Virginia Portfolio Rosslyn, VA 666,000 1974-1980 10/18/96
New England Executive Park Burlington, MA 817,000 1970-1985 11/15/96
245 First Street Cambridge, MA 263,000 1985-1986 11/21/96
10960 Wilshire Boulevard Westwood, CA 544,000 1971-1992 11/21/96
Shoreline Technology Park Mountain View, CA 727,000 1985-1991 12/20/96
Lake Marriott Business Park Santa Clara, CA 400,000 1981 12/20/96
Presidents Plaza Chicago, IL 791,000 1980-1982 12/27/96
1997 Acquisitions
10880 Wilshire Boulevard Westwood, CA 531,000 1970 4/23/97
Centerpointe I and II Fairfax, VA 409,000 1988-1990 4/30/97
Westbrook Corporate Center Westchester, IL 1,106,000 1985-1996 5/23/97
175 Wyman Street Waltham, MA (1) (1) 5/13/97
225 Franklin Street Boston, MA 929,545 1966 6/4/97
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
Purchase Price (in thousands)
----------------------------------------
Property Name Seller Cash Debt O.P.Units Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 Acquisitions
Perimeter Center Metropolitan Life Insurance Company $322,200 $13,800(2) $336,000
New York Life Portfolio New York Life Insurance Company 150,000 150,000
Fairfax County Portfolio Greensboro Associates, John Marshall
Associates Limited Partnership and
Woodland-Northridge I Limited Partnership $55,400 21,600(2) 77,000
Rosslyn Virginia Portfolio LaSalle Fund II 99,050 99,050
New England Executive Park New England Executive Park Limited Partnership
et al 75,000 75,000
245 First Street Riverview Building Combined Limited Partnership 45,000 45,000
10960 Wilshire Boulevard 10960 Property Corporation 133,000 133,000
Shoreline Technology Park Teachers Insurance and Annuity Association (TIAA) 139,080 139,080
Lake Marriott Business Park Teachers Insurance and Annuity Association (TIAA) 43,920 43,920
Presidents Plaza Metropolitan Life Insurance Company 38,000 39,000(2) 77,000
1997 Acquisitions
10880 Wilshire Boulevard 10880 Property Corporation 99,800 99,800
Centerpointe Joshua Realty Corporation 25,000 30,000 55,000
Westbrook Corporate Center Westbrook Corporate Center Associates, 33,171 106,000 42,929(2) 182,100
Westbrook Corporate Center IV Associates
Limited Partnership and Westbrook Corporate
Center V Associates Limited Partnership
175 Wyman Street Hewlett-Packard Company 24,000 24,000
225 Franklin Street Hexalon Real Estate, Inc. 280,000 280,000
</TABLE>
(1) 175 Wyman Street consists of a vacant 335,000 square foot
office/research and development complex and 26.7 acres of land suitable for
development. The Company plans to redevelop the property into 400,000 square
feet of class A office space.
(2) The Company issued Operating Partnership Units in the amount of
540,059 for Perimeter Center ($25.55 per unit), 833,820 for the Fairfax County
Portfolio ($25.90 per unit), 1,171,500 for Presidents Plaza ($33.29 per unit)
and 1,374,006 for Westbrook Corporate Center ($31.24 per unit). These Units were
valued based on the average trading price of Beacon Properties Corporation's
Common Stock for the applicable period (20 to 30 days) prior to closing as
prescribed in the purchase and sale agreements.
Common Stock Offerings included in pro forma:
Price Per Gross Net
Year Month Shares Share Proceeds Proceeds
- ---- ----- ------ ----- -------- --------
(in thousands)
1996 March 7,036,000 26.25 184,695 173,800
1996 August 5,750,000 25.75 148,063 139,400
1996 November 13,723,000 30.75 421,982 398,900
1996 December 1,132,400 33.47 37,896 37,800
1997 April 7,000,000 32.125 224,875 211,383
F-7
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------------------------------------------
Beacon April
Properties 1997 10880 Westlakes
Corporation Common Wilshire Office Park
Historical Stock Offering Boulevard Centerpointe Sale
---------- -------------- --------- ------------ ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate, net $1,585,445 $ 99,800 $55,000 (54,525)
Deferred financing and leasing costs, net 18,155 (1,039)
Cash and cash equivalents 17,315 187,383 (99,800) (25,000) 71,775 (D)
Mortgage notes receivable 51,507
Other assets 46,305 (941)
Investments in and advance to
joint ventures and corporations 52,121
---------- -------- -------- ------- -------
Total assets $1,770,848 $187,383 $0 $30,000 $15,270
========== ======== ======== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $451,862 $30,000 (C)
Note payable, Credit Facility 153,000 (24,000)(A)
Other liabilities 34,414 (1,235)
Investment in joint venture 24,458
---------- -------- -------- ------- -------
Total liabilities 663,734 (24,000) 0 30,000 (1,235)
Minority interest in Operating Partnership 108,509
Stockholders' equity 998,605 211,383 (B) 16,505
---------- -------- -------- ------- -------
Total liabilities and stockholders' equity $1,770,848 $187,383 $0 $30,000 $15,270
========== ======== ======== ======= =======
</TABLE>
F-8
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET--(Continued)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------------------------------
Proposed
Westbrook 225 1997
175 Wyman St Corporate Franklin Preferred Pro Forma
Land Center Street Stock Offering Consolidated
---- ------ ------ -------------- ------------
(dollars in thousands except per share and unit amounts)
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate, net 24,000 182,100 280,000 $2,171,820
Deferred financing and leasing costs, net 17,116
Cash and cash equivalents (24,000) (33,171) (74,000) 20,502
Mortgage notes receivable 51,507
Other assets 45,364
Investments in and advance to 0
joint ventures and corporations 52,121
------- -------- -------- -------- ----------
Total assets $0 $148,929 $206,000 $0 $2,358,430
======= ======== ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $106,000 (E) $587,862
Note payable, Credit Facility 204,000 (145,050)(A) 187,950
Other liabilities 2,000 35,179
Investment in joint venture 24,458
------- -------- -------- -------- ----------
Total liabilities 0 106,000 206,000 (145,050) 835,449
Minority interest in Operating Partnership 42,929 (F) 151,438
Stockholders' equity 0 145,050 (B) 1,371,543
------- -------- -------- -------- ----------
Total liabilities and stockholders' equity $0 $148,929 $206,000 $0 $2,358,430
======= ======== ======== ======== ==========
</TABLE>
Notes:
(A) Repayment of Credit Facility.
(B) The Company sold 7,000,000 shares of common stock at $32.125 per share
on April 10, 1997.
Proceeds of Offering $224,875
Expenses of Offering (6.0%) (13,492)
---------
$211,383
=========
The Company expects to sell 6,000,000 shares of Preferred Stock at
$25.00 per share.
Proceeds of Offering $150,000
Expenses of Offering (3.3%) (4,950)
---------
$145,050
=========
(C) Mortgage debt due on February 28, 2002 with interest only through
December 1999 at 7.32% and principal amortized over a 25 year period
thereafter. This mortgage was assumed in connection with the purchase
of Centerpointe.
(D) Gross sale proceeds of $72,500 net of sales costs.
(E) Mortgage debt with a 10 year term with interest at 8.03% and principal
amortized over a 26 year period. This mortgage was assumed in
connection with the purchase of Westbrook Corporate Center.
(F) The seller of Westbrook was issued $42,929 of Operating Partnership
Units consisting of 1,374,006 units valued at $31.244 each. The
valuation is based on the average trading price of Beacon Properties
Corporation common stock for 20 days prior to closing.
F-9
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Beacon October &
Properties New York Life November
Corporation Perimeter and Fairfax Va. 1996
Historical Center (A) Portfolios (B) Acquisitions (G)
---------- ---------- -------------- ----------------
(dollars in thousands except per share amounts)
<S> <C> <C> <C> <C>
Revenue:
Rental income $147,825 $6,420 $19,098 $38,886
Management fees 3,005
Recoveries from tenants 16,719 304 3,788 3,674
Mortgage interest income 4,970
Other income 11,272 208 845 3,012
--------- ------- ------- --------
Total revenue 183,791 6,932 23,731 45,572
--------- ------- ------- --------
Expenses:
Property expenses 37,211 1,562 4,875 11,716
Real estate taxes 18,124 591 1,708 3,991
General and administrative 19,331 378 812 1,700
Mortgage interest expense 30,300 1,895 (C) 2,954 (F)
Interest - amortization of financing costs 2,084 15 (D)
Depreciation and amortization 33,184 1,196 (E) 4,374 (E) 9,105 (E)
--------- ------- ------- --------
Total expenses 140,234 5,637 14,723 26,512
--------- ------- ------- --------
Income from operations 43,557 1,295 9,008 19,060
Equity in net income of joint ventures and corporation 4,989
--------- ------- ------- --------
Income from continuing operations 48,546 1,295 9,008 19,060
Discontinued operations :
Loss from operations - Construction Company (2,609)
Loss on sale - Construction Company (249)
Gain on sale - Westlakes Office Park
--------- ------- ------- --------
Income before minority interest 45,688 1,295 9,008 19,060
Minority interest in Operating Partnership (5,988)
--------- ------- ------- --------
Income before extraordinary items 39,700 1,295 9,008 19,060
Series A Preferred dividends
--------- ------- ------- --------
Net income available for common shares
before extraordinary items $39,700 $1,295 $9,008 $19,060
========= ======= ======= ========
Common shares outstanding
Net income per common share
</TABLE>
F-10
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS--(Continued)
For the Year Ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
December Westlakes 225
1996 Recent Office Park Franklin
Acquisitions (H) Acquisitions (I) Sale (K) Street (L)
---------------- ---------------- -------- ----------
(dollars in thousands except per share amounts)
<S> <C> <C> <C> <C>
Revenue:
Rental income $26,858 $40,486 ($8,422) $25,607
Management fees
Recoveries from tenants 6,099 2,464 (1,020) 5,527
Mortgage interest income
Other income 470 1,541 (1,293) 1,230
-------- ------- -------- --------
Total revenue 33,427 44,491 (10,735) 32,364
-------- ------- -------- --------
Expenses:
Property expenses 4,509 9,206 (2,588) 5,093
Real estate taxes 5,036 4,653 (626) 3,846
General and administrative 1,250 1,108 (472) 844
Mortgage interest expense 10,380
Interest - amortization of financing costs
Depreciation and amortization 6,555 (E) 10,513 (E) (2,458) 8,400 (E)
-------- ------- -------- --------
Total expenses 17,350 35,860 (6,144) 18,183
-------- ------- -------- --------
Income from operations 16,077 8,631 (4,591) 14,181
Equity in net income of joint ventures and corporation
-------- ------- -------- --------
Income from continuing operations 16,077 8,631 (4,591) 14,181
Discontinued operations :
Loss from operations - Construction Company
Loss on sale - Construction Company
Gain on sale - Westlakes Office Park 16,505
-------- ------- -------- --------
Income before minority interest 16,077 8,631 11,914 14,181
Minority interest in Operating Partnership
-------- ------- -------- --------
Income before extraordinary items 16,077 8,631 11,914 14,181
Series A Preferred dividends
-------- ------- -------- --------
Net income available for common shares
before extraordinary items $16,077 $8,631 $11,914 $14,181
======== ======= ======== ========
Common shares outstanding
Net income per common share
</TABLE>
F-11
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS--(Continued)
For the Year Ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Consolidated
----------- ------------
(dollars in thousands except per share amounts)
<S> <C> <C>
Revenue:
Rental income $296,758
Management fees 3,005
Recoveries from tenants 37,555
Mortgage interest income $ 611 (M) 5,581
Other income 17,285
--------- -----------
Total revenue 611 360,184
--------- -----------
Expenses:
Property expenses 71,583
Real estate taxes 37,323
General and administrative 250 (N) 25,202
Mortgage interest expense 11,611 (O) 57,139
Interest - amortization of financing costs 2,099
Depreciation and amortization 70,869
--------- -----------
Total expenses 11,861 264,215
--------- -----------
Income from operations (11,249) 95,968
Equity in net income of joint ventures and corporation 4,989 (1)
--------- -----------
Income from continuing operations (11,249) 100,958
Discontinued operations :
Loss from operations - Construction Company (2,609)
Loss on sale - Construction Company (249)
Gain on sale - Westlakes Office Park 16,505
--------- -----------
Income before minority interest (11,249) 114,605
Minority interest in Operating Partnership (6,284)(P) (12,272)
--------- -----------
Income before extraordinary items (17,532) 102,333 (2)
Series A Preferred dividends (13,688)(Q) (13,688)
--------- -----------
Net income available for common shares
before extraordinary items ($31,220) $ 88,645
========= ===========
Common shares outstanding 55,237,322
Net income per common share $1.60
(1) Includes :
Depreciation and amortization $4,033
(2) Company share of Operating Partnership is 87.84%
</TABLE>
See accompanying notes to pro forma condensed
consolidated statement of operations.
F-12
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited and dollars in thousands)
(A) Results of operations of Perimeter Center for the period ended February 14,
1996.
Rental income-historical $6,128
Pro forma straight-line rent adjustment 292
------
Pro forma rental income $6,420
======
(B) Results of operations of the Fairfax County Portfolio and the New York Life
Portfolio for the periods ended September 4, 1996 and August 15, 1996,
respectively.
<TABLE>
<CAPTION>
Fairfax New York
County Life
Portfolio Portfolio Total
-------------------------------------------
<S> <C> <C> <C>
Revenue:
Rental income-historical $7,284 $11,048 $18,332
Pro forma straight-line rent adjustment 377 389 766
-------------------------------------------
Pro forma rental income 7,661 11,437 19,098
Management fees
Recoveries from tenants 542 3,247 3,788
Mortgage interest income
Other income 72 773 845
-------------------------------------------
Total revenue 8,274 15,457 23,731
-------------------------------------------
Expenses:
Property expenses 1,581 3,294 4,875
Real estate taxes 364 1,345 1,708
General and administrative 80 732 812
Mortgage interest expense (F) 2,954 2,954
Interest - amortization of financing costs
Depreciation and amortization (E) 1,568 2,806 4,374
-------------------------------------------
Total expenses 6,546 8,177 14,723
-------------------------------------------
Income from operations $1,728 $ 7,280 $ 9,008
===========================================
</TABLE>
(C) Net interest expense associated with the MetLife Mortgage Loan in the
amount of $218 million based on a 7.08% interest rate for the period
ended prior to March 15, 1996.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
F-13
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited and dollars in thousands)
(E) Detail of depreciation expense by property is presented as follows:
<TABLE>
<CAPTION>
Basis Life Depreciation
----- ---- ------------
<S> <C> <C> <C>
Perimeter Center $287,130 30 yrs $1,196
======
Fairfax County Portfolio $69,300 30 yrs $1,568
The New York Life Portfolio 135,000 30 yrs 2,806
------
$4,374
======
October & November 1996 Acquisitions:
-------------------------------------
Rosslyn, Virginia Portfolio 89,145 30 yrs $2,352
New England Executive Park 67,500 30 yrs 1,969
245 First Street 40,500 30 yrs 1,209
10960 Wilshire Boulevard 119,700 30 yrs 3,574
------
$9,105
======
December 1996 Acquisitions:
---------------------------
Lake Marriott Business Park 31,110 30 yrs $1,008
Shoreline Technology Park 100,650 30 yrs 3,263
Presidents Plaza 69,250 30 yrs 2,284
------
$6,555
======
1997 Acquisitions:
----------------------
10880 Wilshire Boulevard 99,800 30 yrs $3,400
Centerpointe 49,500 30 yrs 1,650
Westbrook Corporate Center 163,890 30 yrs 5,463
------
$10,513
======
225 Franklin Street 252,000 30 yrs $ 8,400
======
</TABLE>
(F)Fairfax County Portfolio interest expense on debt assumed for period prior to
acquisition:
<TABLE>
<CAPTION>
Principal Rate Expense
--------- ---- -------
<S> <C> <C> <C>
JOHN MARSHALL $21,068 8.38% $1,197
EJ RANDOLPH (1) 18,016 7.78% 951
NORTHRIDGE 16,306 7.28% 806
------- ------
$55,390 $2,954
======= ======
</TABLE>
(1) Paid off by Credit Facility proceeds at closing.
F-14
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited and dollars in thousands)
(G) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park, 245 First Street and 10960 Wilshire Boulevard for the period
prior to acquisition.
<TABLE>
<CAPTION>
Rosslyn New England 10960
Virginia Executive Wilshire
Portfolio Park 245 First St. Blvd. Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Rental income-historical $11,640 $11,766 $4,552 $9,650 $37,608
Pro forma straight-line rent adjustment 361 283 510 124 1,278
---------------------------------------------------------------------
Pro forma rental income 12,001 12,049 5,062 9,774 38,886
Management fees
Recoveries from tenants 528 1,113 1,776 257 3,674
Mortgage interest income
Other income 1,066 533 1,413 3,012
---------------------------------------------------------------------
Total revenue 13,595 13,162 7,371 11,444 45,572
---------------------------------------------------------------------
Expenses:
Property expenses 2,611 4,958 1,020 3,126 11,716
Real estate taxes 747 1,421 913 910 3,991
General and administrative 575 471 81 572 1,700
Mortgage interest expense
Interest - amortization of financing costs
Depreciation and amortization (E) 2,352 1,969 1,209 3,574 9,105
---------------------------------------------------------------------
Total expenses 6,286 8,819 3,223 8,183 26,512
---------------------------------------------------------------------
Income from operations $ 7,308 $ 4,343 $4,148 $ 3,262 $19,060
=====================================================================
</TABLE>
(H) Results of operations of Lake Marriott Business Park, Shoreline Technology
Park and Presidents Plaza for the period prior to acquisition.
<TABLE>
<CAPTION>
Shoreline Lake Marriott
Technology Business Presidents
Park Park Plaza Total
--------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Rental income-historical $12,942 $3,824 $9,244 $26,010
Pro forma straight-line rent adjustment 237 611 848
--------------------------------------------------------
Pro forma rental income 12,942 4,061 9,855 26,858
Management fees
Recoveries from tenants 1,068 996 4,035 6,099
Mortgage interest income
Other income 470 470
--------------------------------------------------------
Total revenue 14,010 5,057 14,359 33,427
--------------------------------------------------------
Expenses:
Property expenses 105 718 3,685 4,509
Real estate taxes 1,068 395 3,572 5,036
General and administrative 71 8 1,171 1,250
Mortgage interest expense
Interest - amortization of financing costs
Depreciation and amortization (E) 3,263 1,008 2,284 6,555
--------------------------------------------------------
Total expenses 4,508 2,130 10,712 17,350
--------------------------------------------------------
Income from operations $ 9,503 $2,927 $3,647 $16,077
========================================================
</TABLE>
F-15
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited and dollars in thousands)
(I)Results of operations of 10880 Wilshire Boulevard, Centerpointe and Westbrook
Corporate Center for the year 1996.
<TABLE>
<CAPTION>
10880 Westbrook
Wilshire Corporate
Boulevard Centerpointe Center Total
-------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Rental income-historical $8,687 $7,293 $21,029 $37,009
Pro forma straight-line rent adjustment 399 300 2,778 3,477
-------------------------------------------------------
Pro forma rental income 9,086 7,593 23,807 40,486
Management fees
Recoveries from tenants 80 578 1,806 2,464
Mortgage interest income
Other income 1,306 99 136 1,541
-------------------------------------------------------
Total revenue 10,472 8,270 25,749 44,491
-------------------------------------------------------
Expenses:
Property expenses 3,066 1,740 4,400 9,206
Real estate taxes 1,043 497 3,113 4,653
General and administrative 720 180 208 1,108
Mortgage interest expense 1,914(J) 8,466(J) 10,380
Interest - amortization of financing costs
Depreciation and amortization (E) 3,400 1,650 5,463 10,513
-------------------------------------------------------
Total expenses 8,229 5,981 21,650 35,860
-------------------------------------------------------
Income from operations $2,243 $2,289 $ 4,099 $ 8,631
=======================================================
</TABLE>
(J) Interest expense on mortgage debt assumed:
Centerpointe - historical 1996 expense.
Westbrook Corporate Center - based on a principal balance of $106,000 with
interest calculated at 8.03%.
(K) Historical results of operations of Westlakes Office Park
(L) Results of operations of 225 Franklin Street for 1996.
Rental income historical 24,172
Pro-forma straight-line rent adjustment 1,435
------
Pro-forma rental income 25,607
======
(M) Interest income related to the acquisition of the Rowes Wharf mortgage.
(N) Additional general and administrative expense attributable to acquisitions.
F-16
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited and dollars in thousands)
(O) Credit Facility Interest expense:
Pro Forma Credit Facility balance $187,950
Average Credit Facility rate through December 31, 1996 7.78%
-------
Pro Forma Credit Facility interest expense full year 14,623
Less historical 1996 Credit Facility interest expense 3,294
-------
Pro Forma adjustment 11,329
--------
Mortgage Interest:
Pro Forma Mortgage Interest on Centerpointe Full Year
based on principal balance of $30,000 with interest at
7.32% 2,196
Less: Historical 1996 Expense 1,914
-------
282
-------
Grand Total $11,611
=======
(P) Reflects decrease for minority interest (12.16%) in Operating Partnership
before preferred shares.
(Q) Series A preferred dividends based on 6,000,000 shares with a $25.00 per
share redemption price at 9.125%.
F-17
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Beacon
Properties Westlakes 225
Corporation Recent Office Park Franklin
Historical Acquisitions (A) Sale (B) Street (C)
---------- ---------------- -------- ---------
(dollars in thousands except per share amounts and shares outstanding)
Revenue:
<S> <C> <C> <C> <C>
Rental income $63,601 $12,320 (2,189) 6,708
Management fees 821
Recoveries from tenants 8,351 476 (289) 1,321
Mortgage interest income 1,372
Other income 2,575 91 (306) 90
------- ------- ------ ------
Total revenue 76,720 12,887 (2,784) 8,119
------- ------- ------ ------
Expenses:
Property expenses 14,531 2,689 (522) 1,258
Real estate taxes 8,334 1,438 (163) 922
General and administrative 8,627 87 (236) 201
Mortgage interest expense 11,022 2,666
Interest - amortization of financing costs 477
Depreciation and amortization 14,214 2,628 (D) (694) 2,100 (D)
------- ------- ------ ------
Total expenses 57,205 9,508 (1,615) 4,481
------- ------- ------ ------
Income from operations 19,515 3,379 (1,169) 3,638
Equity in net income of joint ventures and corporations 1,439
------- ------- ------ ------
Income from continuing operations 20,954 3,379 (1,169) 3,638
Discontinued operations :
Loss from operations - Construction Company (586)
------- ------- ------ ------
Income before minority interest 20,368 3,379 (1,169) 3,638
Minority interest in Operating Partnership (2,348)
------- ------- ------ ------
Income before extraordinary items $18,020 $3,379 ($1,169) $3,638
Series A Preferred dividends
------- ------- ------ ------
Net income available for common shares
before extraordinary items 18,020 3,379 (1,169) 3,638
======= ======= ====== ======
Common shares outstanding
Net income per common share
</TABLE>
F-18
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS--(Continued)
For the Three Months Ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Consolidated
----------- ------------
(dollars in thousands except per
share amounts and shares outstanding)
<S> <C> <C>
Revenue:
Rental income $80,440
Management fees 821
Recoveries from tenants 9,859
Mortgage interest income 1,372
Other income 2,450
------ ----------
Total revenue 94,942
------ ----------
Expenses:
Property expenses 17,956
Real estate taxes 10,531
General and administrative 8,679
Mortgage interest expense 636 (E) 14,323
Interest - amortization of financing costs 477
Depreciation and amortization 18,248
------ ----------
Total expenses 636 70,215
------ ----------
Income from operations (636) 24,727
Equity in net income of joint ventures and corporations 1,439 (1)
------ ----------
Income from continuing operations (636) 26,166
Discontinued operations :
Loss from operations - Construction Company (586)
------ ----------
Income before minority interest (636) 25,580
Minority interest in Operating Partnership (346)(F) (2,694)
------ ----------
Income before extraordinary items ($982) $22,886 (2)
Series A Preferred dividends (3,422)(G) (3,422)
------ ----------
Net income available for common shares
before extraordinary items (4,404) 19,464
====== ==========
Common shares outstanding 55,237,322
Net income per common share $0.35
(1) Includes :
Depreciation and amortization $1,006
(2) Company share of Operating Partnership is 87.84%
</TABLE>
See accompanying notes to pro forma condensed
consolidated statement of operations.
F-19
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997
(Unaudited)
(A) Results of operations of 10880 Wilshire Boulevard, Centerpointe and
Westbrook Corporate Center for the three months ended March 31, 1997.
<TABLE>
<CAPTION>
10880 Westbrook
Wilshire Corporate
Boulevard Centerpointe Center Total
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Rental income - historical $3,277 $1,823 $6,313 $11,413
Pro forma straight - line rent adjustment 538 75 294 907
--------------------------------------------------------------
Pro forma rental income
3,815 1,898 6,607 12,320
Management fees
Recoveries from tenants 30 145 301 476
Mortgage interest income
Other income 65 25 1 91
--------------------------------------------------------------
Total revenue 3,910 2,068 6,910 12,887
--------------------------------------------------------------
Expenses:
Property expenses 1,024 435 1,230 2,689
Real estate taxes 289 124 1,025 1,438
General and administrative 25 45 17 87
Mortgage interest expense 549 2,117 2,666
Interest - amortization of financing costs
Depreciation and amortization (D) 850 413 1,366 2,628
--------------------------------------------------------------
Total expenses 2,188 1,566 5,754 9,508
--------------------------------------------------------------
Income from operations $1,722 $502 $1,155 $3,379
==============================================================
</TABLE>
(B) The results of operations for Westlakes Office Park for the three months
ended March 31, 1997.
(C) Results of operations of 225 Franklin Street for the three months ended
March 31, 1997.
Rental income - historical 6,728
Pro forma straight - line rent adjustment (20)
------
Pro forma rental income 6,708
======
(D) Detail of depreciation expense by property is presented as follows:
Basis Life Depreciation
Recent Acquisitions:
10880 Wilshire Boulevard 99,800 30 yrs $850
Centerpointe 49,500 30 yrs 413
Westbrook Corporate Center 163,890 30 yrs 1,366
------
$2,628
======
225 Franklin Street 252,000 30 yrs $2,100
======
F-20
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997
(Unaudited)
(E) Credit facility interest expense:
Pro Forma Credit Facility balance $187,950
Average Credit Facility rate 7.27%
--------
Pro Forma Credit Facility interest expense full year 13,671
25%
--------
Pro Forma Credit Facility interest expense 1/4 year 3,418
Less historical 1996 Credit Facility interest expense (2,782)
--------
Pro Forma adjustment $636
========
(F) Reflects decrease for minority interest (12.16%) in Operating Partnership
before preferred shares.
(G) Series A preferred dividends based on 6,000,000 shares with a $25.00
redemption price at 9.125%
F-21
AGREEMENT OF PURCHASE AND SALE
------------------------------
THIS AGREEMENT (the "Agreement") made and entered into as of the 22nd
day of May, 1997, by and between SSB REALTY, INC., a Massachusetts corporation
("Purchaser"); HEXALON REAL ESTATE, INC., a Delaware corporation ("Seller"); and
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY ("Escrow Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Seller, as "Landlord", and purchaser, as "Tenant", are parties
to that certain Amended and Restated Lease Agreement dated as of December 20,
1989, as amended (the "SSB Lease");
WHEREAS, pursuant to Subsection 24.1(b) of the SSB Lease, Purchaser has
exercised the right of first offer contained therein by signifying its
willingness and desire to purchase the "Subject Property" (as hereinafter
defined);
WHEREAS, Seller desires to sell said Subject Property to Purchaser in
accordance with the terms hereof; and
WHEREAS, the parties hereto are desirous of entering into this
Agreement.
NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00),
the premises hereof, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1.
PROPERTY TO BE SOLD
-------------------
Seller agrees to sell and convey to Purchaser, and Purchaser agrees to
buy from Seller, upon and subject to the terms, covenants and conditions set
forth herein, the following (collectively, the "Subject Property"):
1.1. Real Property. All that tract or parcel of land located in the
County of Suffolk, in the Commonwealth of Massachusetts, being more particularly
described on Exhibit 1.1 attached hereto and incorporated herein by reference,
together with the buildings situated thereon and all the tenements,
hereditaments, improvements, fixtures, appurtenances, rights, easements and
rights-of-way incident thereto (collectively, the "Real Property").
429961.8
<PAGE>
1.2. Personal Property of Seller. All right, title and interest of
Seller in the furniture, furnishings, machinery and equipment listed on Exhibit
1.2 attached hereto and incorporated herein by this reference and any other
tangible personalty, if any, owned or leased by Seller and situated on or about
the Real Property and used exclusively in connection with the operation and/or
maintenance of the Real Property (collectively, the "Personal Property").
1.3. Contracts. All right, title and interest of Seller in and to (a)
all construction, architect, engineering, consulting, service, utility, union,
management, maintenance and other contracts and agreements affecting any portion
of the Real Property and/or the Personal Property (including, without
limitation, those contracts listed on Exhibit 1.3 attached hereto and
incorporated herein by this reference) (collectively, the "Contracts"), and (b)
all deposits and other payments made or to be made under the Contracts, together
with the right to receive the same.
1.4. Leases. All right, title and interest of Seller in and to all
leases, occupancy agreements and licenses of space with respect to the Real
Property or any portion thereof (including, without limitation, those leases
listed on Exhibit 1.4 attached hereto and incorporated herein by this reference)
(collectively, the "Leases") and all security and other deposits held or
required to be held by Seller under the terms of said Leases.
1.5. Approvals. All consents, authorizations, variances, waivers,
licenses, permits and approvals from any Federal, state, county, municipal or
other governmental or quasi-governmental agency, department, board, commission,
bureau or other entity or instrumentality in respect of the Real Property,
including, without limitation, those with respect to foundation, use, utilities,
building, fire, traffic and zoning heretofore or hereafter held by or granted to
or for the benefit of Seller with respect to the Real Property, to the extent
assignable (collectively, the "Approvals").
1.6. Tests. All environmental, soil, topographical and traffic studies
and tests relating to the Real Property performed by or at the request of Seller
(collectively, the "Tests").
1.7. Intangible Personal Property. Other than the "Post Office Square
Rights" (as defined in Section 1.9 hereof), all right, title and interest of
Seller in and to all intangible personal property used or useful, or both,
exclusively in connection with the ownership, operation and management of the
Subject Property including, without limitation, all trademarks, trade names,
contract rights, guarantees, licenses, permits and warranties, to the extent
assignable (collectively the "Intangible Personal Property").
1.8. Plans. All right, title and interest of Seller in and to all
engineering and architectural plans, specifications, drawings and surveys
relating to the Subject Property, to the extent assignable (collectively, the
"Plans").
429961.8
-2-
<PAGE>
1.9. Post Office Square Rights. All right, title and interest of Seller
in (a) one hundred (100) shares of Class A Preferred Stock in Post Office Square
Redevelopment Corporation, together with all parking and other rights
appertaining thereto, and (b) seventy (70) shares of common stock and six
hundred thirty (630) shares of preferred stock in Friends of Post Office Square,
Inc. (collectively, the "Post Office Square Rights"), the parties acknowledging,
however, that Seller's interest in the Post Office Square Rights presently is
subject to rights of first refusal in favor of, as applicable, Post Office
Square Redevelopment Corporation and Friends of Post Office Square, Inc. and the
shareholders thereof. Seller shall use good faith efforts to cause said rights
of first refusal to be released or waived with respect to the conveyance
contemplated hereunder at or prior to Closing; provided, however, that Seller's
inability to obtain the aforesaid releases or waivers shall not limit or modify
the obligations of Purchaser hereunder.
ARTICLE 2.
INSPECTION; AS-IS
-----------------
2.1. Purchaser's Right of Inspection.
(a) Purchaser acknowledges that, from and after April 22, 1997,
Purchaser has had and shall have an opportunity to enter upon the Subject
Property in order to conduct such tests, inspections, examinations, surveys,
analyses, investigations and inquiries with respect to the Subject Property as
Purchaser deemed necessary and such right shall continue until the earlier of
the Closing hereunder or the termination of this Agreement. Purchaser has had
free and complete access during reasonable business hours to all documentation,
agreements and other information in the possession of Seller or any employee,
agent or independent contractor of Seller pertaining to the ownership, use or
operation of the Subject Property, and Purchaser has had the right to make
copies of same at the expense of Purchaser. Purchaser shall pay all costs and
expenses incurred in connection with the exercise of its rights set forth in
this Section 2.1, shall restore the Subject Property as close as reasonably
practical to the condition in which it existed immediately prior to any action
by Purchaser permitted hereunder, and shall indemnify Seller against and defend
and hold Seller harmless from any liens, claims, losses, damages, costs and
liabilities (including, without limitation, attorneys' fees and court costs and
expenses) arising in connection with Purchaser's exercise of the rights set
forth in this Section 2.1.
(b) In addition to the foregoing rights, Purchaser shall have a
limited right to terminate this Agreement by written notice to Seller
(specifying in detail the reasons for such termination), delivered prior to the
end of the fifth (5th) business day after the date of this Agreement in the
event that Purchaser's discussions with existing tenants of the Real Property
disclose any adverse fact about the Subject Property that was (i) not otherwise
learned by Purchaser during the course of its due diligence pursuant to
Subsection 2.l(a), and (ii) is a fact that reasonably would cause a prudent,
sophisticated real estate investor to terminate an agreement to purchase an
office building of the general size and nature of the Subject Property. In the
event Purchaser terminates this Agreement pursuant to this Subsection 2.1(b),
this Agreement shall be null and void and of no further force and effect except
as described in
429961.8
-3-
<PAGE>
Section 13.3 hereof, and no party hereto shall have any further rights, duties,
liabilities or obligations to the other by reason of this Agreement except as
described in Section 13.3 hereof, and all Earnest Money thereupon shall be
returned by Escrow Agent to Purchaser.
(c) In the event that Purchaser shall elect to terminate this
Agreement pursuant to this Section 2.1, Purchaser shall deliver to Seller, at no
cost to Seller, copies of any studies, surveys or similar material that
Purchaser has had prepared with respect to the Subject Property. Seller hereby
acknowledges that such delivery by Purchaser constitutes good, adequate and
sufficient consideration for the termination rights granted to Purchaser in this
Section 2.1.
(d) Purchaser shall continue to have the right prior to Closing to
inspect the Subject Property during reasonable business hours in accordance with
the terms and limitations of this Section 2.1.
2.2. Acceptance of Subject Property in As-Is Condition. As a material
inducement to Seller to execute this Agreement:
(a) Purchaser acknowledges, represents and warrants that, except
to the extent expressly provided in Articles 3 or 8 of this Agreement:
(i) Purchaser has performed and completed (subject to the
tenant discussions described in Subsection 2.l(b)) its own
examination and inspection of the Subject Property in accordance
with Section 2.1 hereof (including, without limitation, the
construction, operation, maintenance, leasing, income, expenses,
applicability of laws and ordinances, physical condition, the
presence or absence of "Hazardous Materials" (as hereinafter
defined in Section 3.12 hereof) of, at or with respect to the
Subject Property), and such other documents and materials with
respect to the Subject Property that Purchaser has deemed
necessary or appropriate in connection with its investigation and
examination of the Subject Property (collectively, the "Relevant
Aspects of the Subject Property"); and
(ii) Purchaser has decided to purchase the Subject Property
solely on the basis of its own independent investigation.
(b) Purchaser will accept the Subject Property in the status,
manner and condition in which the aforesaid inspections and examinations of
Purchaser have disclosed, Purchaser further acknowledging and agreeing that the
Subject Property is being conveyed by Seller "AS IS" and "WHERE IS" and "WITH
ALL FAULTS", except to the extent expressly provided in Articles 3 and 8 of this
Agreement and subject to the condition precedent described in Section 10.2
hereof.
(c) Except as expressly set forth in Article 3 of this Agreement,
none of Seller, Seller's property manager, Seller's investment advisor, Seller's
attorneys, accountants, agents, contractors or consultants has made, makes or
has authorized anyone
429961.8
-4-
<PAGE>
else to make any representation to Purchaser as to any of the Relevant Aspects
of the Subject Property or any other matter or thing pertaining to the Subject
Property, and Purchaser acknowledges that no such representation or warranty has
been made or shall be made and that in entering into this Agreement it has not
relied on any representation or warranty other than those expressly set forth in
this Agreement. EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 3 OF THIS AGREEMENT,
NONE OF SELLER, SELLER'S PROPERTY MANAGER, SELLER'S INVESTMENT ADVISOR OR
SELLER'S ATTORNEYS, ACCOUNTANTS, AGENTS, CONTRACTORS OR CONSULTANTS MAKES ANY
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE SUBJECT PROPERTY.
ARTICLE 3.
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
--------------------------------------------------
For the purposes of this Agreement, any and all uses of the phrases "to
Seller's knowledge" or other references to "Seller's knowledge" or words of
similar import in this Agreement shall mean the actual, present, conscious
knowledge of James W. Smith, III, L. Clay Adams, Jr. or Martin J. Hoek
(collectively, the "Seller's Knowledge Individuals") as of the date hereof as to
a fact. Purchaser acknowledges that, for purposes of the representations and
warranties set forth in this Agreement, such individuals have not performed and
are not obligated to perform any investigation, including, without limitation,
an investigation or review of any files in the possession of Seller or any
agent, consultant or advisor of Seller, with respect to the subject matters
addressed in the representations and warranties of Seller set forth in this
Agreement, except, however, that the Seller's Knowledge Individuals delivered a
copy of this Article 3 to Ian McE. King ("Mr. King") of Seller's management
agent, LaSalle Partners (New York) Limited Partnership ("LaSalle") and asked
that he review such warranties and representations and inform James W. Smith
III, in writing, of any inaccuracy therein of which Mr. King was aware. Prior to
the execution of this Agreement, Mr. King informed the Seller's Knowledge
Individuals that he was not aware of any such inaccuracy. The knowledge of any
individual or entity shall not be imputed to the Seller's Knowledge Individuals.
Seller represents, warrants and covenants as follows:
3.1. Valid Existence of Seller. Seller is a corporation in good
standing, duly formed and validly existing under the laws of the State of
Delaware.
3.2. Authority to Sell. Seller has the corporate right, power and
authority (a) to sell the Subject Property to Purchaser in accordance with the
terms and conditions hereof; (b) to execute and deliver this Agreement and all
other documents to be executed and delivered in
429961.8
-5-
<PAGE>
connection with the transactions contemplated herein, either simultaneously
herewith or at Closing; and (c) to perform all obligations of Seller that arise
under this Agreement or under such other documents.
3.3. Title to Subject Property. Seller is the sole owner of title to
all of the Subject Property, subject only to the matters described herein and
the permitted title exceptions more particularly described on Exhibit 3.3
attached hereto and incorporated herein by reference, matters of record and
matters which would be disclosed by a current survey of the Real Property
(collectively, the "Permitted Encumbrances"). Except for the Permitted
Encumbrances or as otherwise described herein, Seller has granted no outstanding
options to purchase or rights of first refusal with respect to all or any part
of the Subject Property and has entered into no outstanding contracts with
others for the sale, mortgage, pledge, hypothecation, assignment, lease or other
transfer of all or any part of the Subject Property.
3.4. Notices. To Seller's knowledge, except as set forth in Exhibit 3.4
attached hereto and incorporated herein by reference, Seller has not received
any written notice or citation: (a) from any federal, state, county or municipal
authority alleging any fire, health, safety, building pollution, environmental,
zoning or other violation of any law, regulation, permit, order or directive in
respect of the Real Property or any part thereof, which has not been corrected
in all material respects; or (b) from any governmental authority with respect to
a proposed eminent domain taking of all or any portion of the Real Property or
with respect to any failure to comply in any material respect with any statutes,
laws, ordinances, rules, regulations, orders or directives of any and all
governmental agencies pertaining to the use or occupancy of the Real Property,
which failure has not been corrected in all material respects.
3.5. Violations. To Seller's knowledge, except as set forth in Exhibit
3.5: (a) all governmental approvals required for the current use of the Subject
Property have been issued and are currently in effect without violation in any
material respect; and (b) the Subject Property is in compliance with, and not in
violation in any material respect of, any applicable statutes, laws, ordinances,
rules, regulations, orders or directives; provided, however, that Seller makes
no representation herein with respect to compliance with the Americans with
Disabilities Act or any rule, regulation or interpretation promulgated
thereunder.
3.6. No Litigation. Except as set forth in Exhibit 3.6 attached hereto
and incorporated herein by reference, there is no action, suit, litigation,
hearing or administrative proceeding pending or, to Seller's knowledge,
threatened with respect to all or any portion of the Subject Property, or
relating to Seller that, if adversely determined, would materially affect all or
any part of the Subject Property or Seller's ability to convey the Subject
Property to Purchaser in accordance with this Agreement.
429961.8
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3.7. Description of Tenant Leases. Exhibit 1.4 lists all Leases in
force on the date hereof to which Seller is a party, true and complete copies of
each of such Leases having been made available for review by Purchaser prior to
the date hereof. To Seller's knowledge, no person or entity has or claims any
right to possess the Real Property or any part thereof by virtue of any
agreement made or right granted by Seller except as shown on said Exhibit 1.4.
Exhibit 1.4 also contains a list of all security deposits posted under the
Leases.
3.8. Status of Tenant Leases. Except with respect to the SSB Lease or
as set forth on Exhibit 1 .4:
(a) to Seller's knowledge, each Lease is in full force and effect;
(b) no rent has been paid by any tenant or occupant of the Real
Property more than thirty (30) days in advance;
(c) to Seller's knowledge, neither any tenant under any Lease nor
Seller is in default in the performance of any material covenant, agreement or
condition contained in any of the Leases;
(d) Seller has not received written notice from any tenant under
any Lease regarding pending or threatened material offsets against rent or for
any material monetary or material claim against the Seller; and
(e) to Seller's knowledge, except for the matters described in
Subsection 8. l(e) or as set forth on Exhibit 3.8(e), Leases for space not yet
occupied and any renewals or expansions of any Lease, any and all construction
or "landlord work" to be performed by Seller under any of the Leases has been
substantially completed in all material respects and any outstanding tenant
improvement allowances that are to be paid to any tenant under any Lease have
been paid.
The representations and warranties made in this Section 3.8 shall be deemed to
be withdrawn automatically and of no further force or effect as to each Lease
for which Purchaser receives a tenant estoppel on or before the Closing, except
to the extent that any such tenant estoppel contains information that is
inconsistent with any of the representations or warranties made by Seller in
this Section 3.8.
3.9. Leasing Commissions. The only brokerage commissions now or
hereafter due or payable by Seller to brokers or other persons with respect to
any of the Leases and/or any renewals or extensions thereof are the commissions
listed on Exhibit 3.9 attached hereto and incorporated herein by reference
(collectively, the "Leasing Commissions").
429961.8
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<PAGE>
3.10. No Conflicts. To Seller's knowledge, neither the execution nor
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (a) will result in the acceleration of any encumbrance
pertaining to the Subject Property that will not be paid off at Closing; (b)
will result in the cancellation of any Contract or Lease pertaining to the
Subject Property; or (c) will constitute a violation of any applicable code,
resolution, law, statute, regulation, ordinance, rule, judgment, decree or
order, the violation of which would materially affect Seller's ability to convey
the Subject Property to Purchaser in accordance with this Agreement.
3.11. Non-Foreign Person. Seller is not a "foreign person" for purposes
of the withholding rules of the Federal Deficit Reduction Act of 1984.
3.12. Hazardous Materials. To Seller's knowledge, except as disclosed
in the Environmental Assessment Report, dated October 22, 1987, prepared by ITT
Research Institute, and the Utility Shaft Asbestos Removal Feasibility Study,
dated July 27, 1993, prepared by Briggs (Covino Environmental Associates, Inc.),
(a) there are no Hazardous Materials at the Real Property; and (b) Seller has
not previously used, manufactured, generated, treated, stored, disposed of or
released any Hazardous Materials on or under the Real Property or transported
any Hazardous Materials over the Real Property in violation of any applicable
Environmental Laws. As used herein, (x) the term "Environmental Laws" shall mean
any applicable state, federal, county, regional, municipal or local law,
statute, ordinance, rule or regulation governing the control of substances
dangerous to public health or safety, as the same may have been amended as of
the date hereof, and shall include, but not be limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss.9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss.6901, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. ss.ss.1801, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
ss.ss.1251, et seq., the Clean Air Act, 42 U.S.C. ss.ss.7401, et seq., the Toxic
Substances Control Act, 15 U.S.C. ss.2601, and the Refuse Act, 33 U.S.C.
ss.ss.407, et seq.; and (y) the term "Hazardous Materials" shall mean those
materials or substances currently defined as "hazardous substances," "hazardous
materials," "hazardous waste," "toxic substances," or other similar designations
under the Environmental Laws, but shall not include ordinary cleaning,
landscaping, maintenance and office supplies or the presence of motorized
vehicles, consistent with the use of the Real Property as an office building
with customary ancillary uses (e.g., food service operations) and which are
used, stored and disposed in compliance with applicable Environmental Laws.
3.13. Description of Contracts. Exhibit 1.3 sets forth a true and
correct list of all of the Contracts, true and complete copies of each of such
Contracts having been made available for review by Purchaser prior to the date
hereof. Except as set forth on Exhibit 1.3, the Subject
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Property is not subject to any operating or maintenance agreements (other than
those that may have been entered into by a tenant of the Subject Property on
such tenant's own behalf that cannot be terminated by Purchaser, without charge
or penalty, upon thirty (30) days' or less notice.
3.14. Insurance. Seller presently carries and shall carry through
Closing "all risk" property insurance on the Real Property (held in blanket
form), with a full replacement value endorsement and coverage against loss of
the rental income produced by the Real Property.
3.15. Truth of Warranties and Representations. The truth and accuracy
in all material respects, as of the date of Closing, of all representations and
warranties made by Seller in this Article 3 (and Seller's failure to cure any
untruth or inaccuracy at or before Closing), shall be an express condition to
Purchaser's obligation to consummate the transactions contemplated herein.
ARTICLE 4.
PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------------------
Purchaser represents, warrants and covenants as follows:
4.1. Valid Existence of Purchaser. Purchaser is a corporation in good
standing, duly formed and validly existing under the laws of the Commonwealth of
Massachusetts.
4.2. Authority to Purchase. Purchaser has the right, power and
authority (a) to purchase the Subject Property from Seller in accordance with
the terms and conditions hereof; (b) to execute and deliver this Agreement and
all other documents to be executed and delivered in connection with the
transaction contemplated herein, either simultaneously herewith or at Closing;
and (c) to perform all obligations of Purchaser that arise under this Agreement
or under such other documents.
4.3. Truth of Purchaser's Warranties and Representations. The truth and
accuracy in all material respects, as of the date of Closing, of the
representations and warranties made by Purchaser in this Article 4 hereof (and
Purchaser's failure to cure any untruth or inaccuracy at or before Closing)
shall be an express condition to Seller's obligation to consummate the
transactions contemplated herein.
ARTICLE 5.
PURCHASE PRICE; EARNEST MONEY: ESCROW AGENT
-------------------------------------------
5.1. Purchase Price. The purchase price (the "Purchase Price") to be
paid by Purchaser to Seller for the Subject Property shall be an amount equal to
the aggregate sum of Two Hundred Seventy-Five Million and No/100 Dollars
($275,000,000.00), which Purchase
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<PAGE>
Price has been allocated by the parties as follows: (a) the portion of the
Purchase Price allocable to the Post Office Square Rights or the equivalent
thereof, the Personal Property and other personalty is Six Million Five Hundred
Seventy Thousand and No/100 Dollars ($6,570,000.00) and (b) the portion of the
Purchase Price allocable to the remainder of the Subject Property is Two Hundred
Sixty-Eight Million Four Hundred Thirty Thousand and No/100 Dollars
($268,430,000.00). The Purchase Price shall be paid by Purchaser to Seller in
cash at Closing by wire transfer of funds, provided that such amount shall be
reduced by the "Earnest Money" (as hereinafter defined in Section 5.2) and
adjusted for the Closing prorations described in Article 8.
5.2. Earnest Money. Purchaser shall pay to Escrow Agent on or before
May 22, 1997 the sum of Two Million Seven Hundred Fifty Thousand and No/100
Dollars ($2,750,000.00) (collectively, with all interest accrued thereon, the
"Earnest Money"), which amount shall be deposited in an interest-bearing account
in a depository designated by Purchaser and reasonably acceptable to Seller and
shall be paid over to Seller and applied against the Purchase Price at Closing,
or paid over to Seller as the "Liquidated Damages" (as defined in Section 12.1
hereof), or returned to Purchaser according to the terms hereof.
5.3. Escrow Agent. The Earnest Money shall be paid to and shall be held
in escrow by Escrow Agent. Escrow Agent shall deposit the Earnest Money in an
interest-bearing account designated by Purchaser (and subject to Seller's
reasonable approval) or, upon receipt of instructions from Purchaser pertaining
to the investment of the Earnest Money (subject to Seller's reasonable
approval), shall so invest the Earnest Money. Seller and Purchaser each
severally designate and appoint Escrow Agent to act as Escrow Agent hereunder.
Escrow Agent, by executing this Agreement, hereby accepts such appointment,
acknowledges receipt of the Earnest Money and agrees to hold and apply the
Earnest Money as provided in this Agreement. Escrow Agent shall serve as escrow
agent hereunder without remuneration other than reimbursement of out-of-pocket
expenses, which shall be paid equally by Seller and Purchaser.
Escrow Agent shall not disburse or otherwise take any action with
respect to the Earnest Money except (i) upon joint instructions from Seller and
Purchaser, which Seller and Purchaser agree to deliver as provided in this
Agreement, or (ii) upon ten (10) days' written notice from Seller to Purchaser
and to Escrow Agent; provided however, that Escrow Agent shall not have received
any written objections from Purchaser to such disbursement within said ten (10)
days after receipt by Purchaser of such notice, or (iii) upon ten (10) days'
written notice from Purchaser to Seller and to Escrow Agent; provided, however,
that Escrow Agent shall not have received any written objections from Seller to
such disbursement within said ten (10) days after receipt by Seller of such
notice.
Prior to or simultaneously with the disbursement of any interest or
earnings hereunder by Escrow Agent, the party receiving such disbursement shall
deliver to Escrow Agent a W-9 Form. The parties hereto hereby acknowledge that,
in the event of any dispute as to who is
437892.1/Compare of 429961.7-8
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<PAGE>
entitled to receive the Earnest Money or the Earnest Money Interest, Escrow
Agent shall have the right to retain the Earnest Money or the Earnest Money
Interest and disburse it in accordance with the final order of a court of
competent jurisdiction or to deposit the Earnest Money or the Earnest Money
Interest with said court, pending a final decision of such controversy. The
parties hereto further agree that Escrow Agent shall not be liable for failure
of the depository and shall only be otherwise liable in the event of its gross
negligence or willful misconduct.
ARTICLE 6.
EVIDENCE OF TITLE/SURVEY
------------------------
6.1. Title Insurance. Purchaser has secured, at Purchaser's expense, a
commitment (the "Title Commitment") for an owner's policy of title insurance
(the "Title Policy") on the then current American Land Title Association
standard form of owner's title insurance policy, to be issued by a national
title insurance company selected by Purchaser (the "Title Company") at its then
current standard rates, without any special premium, in an amount not less than
the Purchase Price. Seller hereby covenants and agrees to furnish the Title
Company with such reasonable affidavits, indemnities and/or certificates as may
be required by the Title Company in order to issue the Title Policy for the Real
Property without any exception for unfiled and unrecorded materialmen's and
mechanics' liens or for parties in possession of any portion of the Real
Property other than those parties described in Exhibit 1.4. Following
Purchaser's initial title examination, Purchaser shall have until the date of
Closing in which to reexamine title to the Subject Property and in which to give
Seller its objection to any matters disclosed by such reexamination (other than
the Permitted Encumbrances) and which were not filed and indexed of record on
the date of Purchaser's initial examination.
6.2. Survey. Purchaser has elected to have prepared, at Purchaser's
expense, a survey of the Real Property (the "Survey") by a surveyor registered
in the Commonwealth of Massachusetts and reasonably acceptable to Seller.
6.3. Objections to Title or Survey. In the event that any reexamination
of title described in the last sentence of Section 6.1 shall show that the Real
Property is subject to any encumbrances described in the last sentence of
Section 6.1, then Purchaser may elect (a) to waive any objection to such
encumbrances and proceed to Closing, subject to the obligation of Seller to pay
and remove all Monetary Encumbrances (as hereinafter defined), or (b) to deliver
written notice to Seller, prior to Closing, of Purchaser's objections to any
such encumbrances; provided, however, that Seller's obligation to remove any
such encumbrances shall be limited to the payment and discharge of all mortgages
(and Seller expressly agrees to remove that certain First Mortgage and Deed of
Trust, dated as of October 14, 1966, between Boston British Properties, Inc. and
Morgan Guaranty Trust Company, as supplemented, together with any related
financing statements), deeds of trust, deeds to secure debt, security
agreements, mechanic's and materialmen's liens, tax liens and assessments, and
other encumbrances that can be cured by the payment of a sum certain, and that
were placed against all or any portion of the Real Property with the consent or
alleged consent of Seller (collectively, "Monetary
429961.8
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<PAGE>
Encumbrances"). If Seller fails to satisfy any such valid objections (other than
Monetary Encumbrances, the validity of which Seller is contesting in good faith
as hereinafter provided) on or before the date of Closing, Purchaser, at
Purchaser's election, (w) may extend the date of Closing for such time period as
it may select, not to exceed thirty (30) days; (x) may waive such objections and
proceed to Closing; or (y) may deduct the amount of any unsatisfied Monetary
Encumbrances which Seller is obligated to cure from the cash portion of the
Purchase Price and proceed to Closing. In the event of any extension of the date
of Closing by Purchaser under clause (w) above, and a subsequent failure of
Seller to cure any valid title objection, Purchaser then may elect between the
alternatives specified in clauses (x) and (y) above or (z) Purchaser may
terminate this Agreement, in which event the Earnest Money shall be returned to
Purchaser, and upon the receipt thereof by Purchaser, all obligations hereunder
shall be null and void and of no further force and effect except as described in
Section 13.3 hereof. Any title objections that Purchaser waives or to which
Purchaser fails to object within the designated time period shall be deemed to
be included in the Permitted Encumbrances. In the event Seller in good faith
contests the validity of any Monetary Encumbrance, then either Seller or
Purchaser, at the election of Seller or Purchaser, may extend the date of
Closing for not more than thirty (30) days, during which period Seller shall use
reasonable good faith efforts to cause such alleged Monetary Encumbrance to be
satisfied, bonded or otherwise removed. In the event Seller is unable to
satisfy, bond or remove the alleged Monetary Encumbrance, Purchaser shall have
the right, at its election, to take either of the actions described in clauses
(x) and (z) above.
ARTICLE 7.
CLOSING
-------
7.1. Closing Date. The consummation of the purchase sale herein
contemplated (such consummation being herein referred to as the "Closing" and
the date of such Closing being herein referred to as the "Closing Date") shall
take place on June 2, 1997, or on such earlier date as may be mutually agreed
upon in writing by Purchaser and Seller; provided, however, that Seller, upon
not less than two (2) days' notice to Purchaser, shall have the right to extend
the Closing Date for a time period not to exceed ten (10) days in order to
collect the items required to be delivered by Seller at Closing pursuant to
Section 7.4 hereof.
7.2. Tax-Free Exchange. Purchaser and Seller acknowledge that Purchaser
and/or Seller (either such party (or both such parties) being referred to as an
"Exchanging Party") may desire to structure the Exchanging Party's acquisition
of the Subject Property and/or the Exchanging Party's disposition of the Subject
Property in a manner intended by the Exchanging Party to constitute a
simultaneous or deferred exchange of the Subject Property for property of a like
kind ("Replacement Property") that is described in Section 1031 of the Internal
Revenue Code of 1986, as amended (an "Exchange"). Notwithstanding anything in
this Agreement to the contrary, but subject to the provisions of Section 13.10
hereof, the Exchanging Party shall have the right to assign its interest in this
Agreement without the other party's consent to a third party in a simultaneous
exchange or to such person or entity as the Exchanging Party may designate to
serve as a "qualified intermediary" (within the meaning of Treasury Regulation
ss.1.1031(k)-
429961.8
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<PAGE>
l(g)(4)) for the sole purpose of enabling the Exchanging Party to effect such an
Exchange); provided, however, that notwithstanding any such assignment, neither
Seller nor Purchaser shall be released from any of such party's liabilities,
obligations or indemnifications under this Agreement. Purchaser and Seller shall
cooperate in all reasonable respects with each other in order to effect any
Exchange; provided, however, that (a) either party's ability to consummate an
Exchange shall not be a condition to the obligations of that party under this
Agreement; (b) neither party warrants or shall be responsible for any of the tax
consequences to the other party with respect to the transactions contemplated
hereunder; and (c) neither party shall be required to incur any additional cost,
expense or liability as a result of any Exchange consummated for the benefit of
the other party.
7.3. Place of Closing. The Closing shall take place at the offices of
Purchaser's counsel in Boston, Massachusetts, or at such other place as may be
mutually agreed upon by Seller and Purchaser.
7.4. Seller's Deliveries at Closing. Seller shall deliver to Purchaser
at the Closing the following items or documents, dated as of the Closing Date:
(a) Deed: A quitclaim deed, in recordable form and suitable and
acceptable for filing with the appropriate Registry District of the Land Court
of the County of Suffolk, duly executed by Seller and conveying to Purchaser all
of Seller's title in and to the Real Property subject only to those matters
deemed to be Permitted Encumbrances as of the Closing Date and not otherwise
removed prior to Closing, and accompanied by all deed stamps required by any
applicable governmental authority in order to record said deed;
(b) Bill of Sale: A bill of sale, or other appropriate
instrument(s) of conveyance, duly executed by Seller, and transferring,
assigning and conveying to Purchaser good title to all of the Personal Property
to the extent transferable thereby, all of the Intangible Rights and the Post
Office Square Rights (to the extent transferable) and subject only to those
matters deemed to be Permitted Encumbrances as of the Closing Date and not
otherwise removed prior to Closing;
(c) Assignment and Assumption Agreement: An assignment and
assumption agreement, duly executed by Seller and Purchaser, in recordable form,
pursuant to which (i) Seller assigns and transfers to Purchaser all of Seller's
right, title and interest in the Contracts and in the Leases; (ii) Purchaser
expressly assumes all obligations of Seller under the Leases (including, without
limitation, the amendments to the leases with Fish & Richardson, P.C.
contemplated by the letters of intent described on Exhibit 1.4) and the
Contracts (including, without limitation, all obligations of the "Landlord"
under the terms of the SSB Lease and under the "Landlord and Tenant Work
Agreement" related thereto (the "Work Agreement")); provided, however, that
Seller will terminate the existing management agreement with LaSalle Partners
Asset Management Limited ("LaSalle Asset Management") as of the Closing and
Purchaser will have no
429961.8
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<PAGE>
continuing liability to LaSalle or to LaSalle Asset Management under such
agreement; and (iii) Purchaser expressly releases Seller from any and all
obligations of "Landlord" under the terms of the SSB Lease and under the Work
Agreement (including, without limitation, any potential obligations for the
remediation of asbestos-containing materials ("ACM") in the utility shafts of
the building on the Real Property and any obligation to indemnify Purchaser
regarding the continued presence from and after the Closing Date of ACM on the
Real Property);
(d) Evidence of Non-Foreign Status: An affidavit or other
documentation required by Section 1445 of the Internal Revenue Code of 1986, as
amended, duly executed by Seller, pursuant to which Seller discloses its federal
tax identification number and confirms that it is not a "foreign person" within
the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended;
(e) Title Affidavits and/or Certificates: Affidavits and/or
certificates, duly executed by Seller, in form reasonably satisfactory to the
Title Company for the issuance of its title policy on the Real Property without
exceptions as to materialmen's and mechanics' liens or parties in possession of
any portion of the Subject Property other than the Permitted Encumbrances or as
described in Exhibit 1.4;
(f) Corporate Excise Tax Lien Waiver: A corporate excise tax lien
waiver issued by the Department of Revenue for the Commonwealth of Massachusetts
with respect to Seller.
(g) Corporate Resolutions of Seller: The duly adopted resolutions
of Seller's Board of Directors authorizing the sale of the Subject Property and
the execution and delivery of the documents to be executed by Seller in
connection herewith;
(h) Leases: The original, signed Leases (or copies thereof
certified by Seller, if originals are not available) as well as Seller's tenant
lease files, and the rent roll and delinquency report for the then current
month;
(i) Contracts: Originals (or copies thereof certified by Seller,
if originals are not available) of the Contracts;
(j) Books and Records: Originals of all books and records in
Seller's possession pertaining to the operation and management of the Subject
Property; provided, however, that Seller may keep copies of all such books and
records;
(k) Estoppel Certificates: Estoppel certificates from tenants
(other than Purchaser) of the Subject Property which, together with Purchaser,
occupy at least ninety percent (90%) of the rentable square footage of the
Subject Property, dated no earlier than twenty (20) days prior to the Closing
Date; provided, however, that in the event Seller is unable to procure the
requisite amount of estoppel certificates, then Seller shall
429961.8
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<PAGE>
have the right, but not the obligation, to satisfy this obligation in part by
furnishing to Purchaser an estoppel certificate from Seller covering each such
Lease for which an estoppel certificate is required hereunder but has not been
obtained from the applicable tenant (provided further, however, that in any
event Seller shall provide estoppel certificates from the actual tenants of the
space rather than from Seller itself with respect to at least seventy-five
percent (75%) of the space for which Seller is required to provide estoppel
certificates pursuant to this Subsection 7.4(k)). Any estoppel executed by
Seller shall certify, to Seller's knowledge, all of the matters set forth in the
form of estoppel certificate originally requested of the subject tenant. Upon
subsequent delivery to Purchaser of any missing tenant estoppel certificate in
the form required herein, Seller's estoppel certificate executed in lieu thereof
shall be deemed cancelled ipso facto, and Purchaser shall return such cancelled
Seller's estoppel certificate to Seller;
(1) Taxes and Charges: Evidence reasonably satisfactory to
Purchaser and Title Company that all real estate taxes, sewer and water rates
and charges, special assessments and betterments, and any utility charges the
non-payment of which could result in a lien upon the Subject Property, either
have been paid or are included in the Closing Statement for purposes of
apportionment;
(m) Locks and Keys: Any and all keys, and lock and safe
combinations respecting the Improvements;
(n) Closing Statement: A closing statement reflecting the Closing
of the transaction contemplated hereby, including any adjustments described in
Article 8 hereof; and
(o) Other: Such other items or documents as Purchaser may
reasonably request.
7.5. Purchaser's Deliveries at Closing. Purchaser shall deliver to
Seller at Closing the following items or documents, dated as of the Closing
Date:
(a) Purchase Price: The Purchase Price described in Section 5.1
hereinabove;
(b) Assignment and Assumption Agreement: The assignment and
assumption agreement described in Subsection 7.4(c) hereinabove;
(c) Closing Statement: The closing statement described in
Subsection 7.4(m) hereinabove; and
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<PAGE>
(d) Corporate Resolutions of Purchaser: The duly executed
resolutions of Purchaser's Board of Directors authorizing the purchase of the
Subject Property and the execution and delivery of the documents to be executed
by Purchaser in connection herewith;
(e) Other: Such other items or documents as the Seller may
reasonably request.
7.6. Satisfaction of Deliveries. The occurrence of the Closing shall be
deemed to constitute full and complete satisfaction of the deliveries required
pursuant to Sections 7.4 and 7.5 hereof.
7.7. No Brokers. Purchaser and Seller, as applicable, each hereby
agrees to be responsible for the payment of any fees, commissions or other
compensation payable to any real estate broker, agent, investment advisor,
consultant or salesman claiming a fee, commission or other compensation by,
through or under Purchaser or Seller, as applicable, in connection with the
conveyance of the Subject Property to Purchaser or any other transactions
contemplated by this Agreement. Purchaser and Seller hereby indemnify each other
against, and agree to hold each other harmless from, any and all claims, loss,
liability, cost and expenses (including reasonable attorneys' fees and court
costs and expenses) for any such commission, fee or other compensation arising
out of or in any way connected with any claimed dealings with the indemnitor and
relating to this Agreement or the purchase and sale of the Subject Property. The
foregoing indemnities shall survive the rescission, cancellation, termination,
or consummation of this Agreement.
7.8. Expenses of the Parties. Seller shall pay its own attorneys' fees
and all transfer taxes, sales taxes, deed stamps and other similar taxes, fees,
charges and expenses incurred or payable with respect to the transfer of the
Subject Property to Purchaser, including, without limitation, all charges for
the recording of any instrument or document delivered by Seller to Purchaser.
Purchaser shall pay its own attorneys' fees, title insurance premiums and
examination fees, surveyor's fees, any tax, fee or charge, if any, on any
mortgage, deed of trust or deed to secure debt given by Purchaser, and all
charges for recording of any instrument or document delivered by Purchaser to
Seller. Purchaser and Seller shall share equally the fees, if any, of the Escrow
Agent. All costs or expenses of performance of obligations hereunder and of the
consummation of the transactions contemplated herein that have not been
specifically assumed by either party under the terms hereof shall be borne by
the party incurring such cost or expense.
7.9. Possession of Subject Property. Seller shall deliver possession of
the Subject Property to Purchaser at the time of Closing, subject only to the
rights of tenants under the Leases and other parties with possessory rights
pursuant to the Permitted Encumbrances as of the Closing Date.
429961.8
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<PAGE>
ARTICLE 8.
PRORATED ITEMS
--------------
8.1. Prorations. The following prorations shall be made as of 11:59
p.m. Iocal time in Boston, Massachusetts the day prior to the Closing Date:
(a) Taxes:
(i) Real and personal property taxes and general and special
assessments shall be prorated on the basis of the fiscal year for
such taxes and assessments. If the Closing Date shall occur before
the real property tax rate for the then current fiscal year is
fixed, the apportionment of taxes shall be made on the basis of
the taxes assessed for the immediately preceding fiscal year.
After the real property taxes are finally fixed for the then
current fiscal year in which the Closing Date has occurred,
Purchaser and Seller shall make a recalculation of the
apportionment of such taxes, and Purchaser or Seller, as the case
may be, shall make an appropriate payment to the other based on
such recalculation.
(ii) After the Closing Date, Purchaser shall cooperate with
Seller in pursuing any tax reduction proceedings relating to the
Subject Property for any tax fiscal year covering any portion of
the period prior to the Closing Date, including, without
limitation, pending proceedings relating to tax fiscal years 1995,
1996 and 1997 (e.g., respectively, the periods running from July
1, 1994 - June 30, 1995; July 1, 1995 - June 30, 1996; and July 1,
1996 - June 30, 1997. If taxes increase or decrease as a result of
said proceedings, or if either Purchaser or Seller otherwise
receives any tax refund relating to the tax fiscal year in which
the Closing Date occurs or relating to any earlier tax fiscal year
(aa) Seller shall receive the benefit of any decreased liability
and shall be responsible for any increased liability relating to
any full tax fiscal year prior to the tax fiscal year in which the
Closing occurs subject to the rights and obligations of any tenant
of the Real Property with respect to any applicable portion of any
such increased or decreased tax liability; and (bb) Seller and
Purchaser shall make an appropriate proration as of the Closing
Date for any decreased or increased liability relating to the tax
fiscal year in which the Closing occurs subject to the rights and
obligations of any tenant of the Real Property with respect to any
applicable portion of any such increased or decreased tax
liability.
(iii) After the Closing Date, Purchaser shall have the right
to control and pursue exclusively without the participation of
Seller any and all tax reduction proceedings relating to the
Subject Property with respect to any tax fiscal year commencing
after the Closing Date; provided that, if taxes increase as a
result of said proceedings, Seller shall have no liability for
such increases.
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(b) Rents:
(i) Prepaid rent, nondelinquent base rents, additional
rents in the nature of operating expense recoveries, electricity
recoveries and tax reimbursements under the Leases shall be
prorated. Rents collected after the Closing Date from tenants
whose rental was delinquent on the Closing Date shall be deemed to
apply first to current rental due at the time of payment and next
to all other rentals unpaid and outstanding at such time (whether
for periods prior to or subsequent to the Closing Date), such
application to be made in the inverse order of the maturity of
such rentals. Unpaid and delinquent rents, to which Seller is
entitled, shall be turned over to Seller if collected by Purchaser
within one hundred eighty (180) days after the Closing Date.
Purchaser agrees to use commercially reasonable efforts to attempt
to collect such rents but shall not be required to institute
litigation proceedings in order to recover same.
(ii) On the Closing Date, Purchaser shall be entitled to a
credit for any tenant security deposits and interest thereon, if
any, and any other amounts due tenants pursuant to such security
deposits unless such security deposits have been previously
applied by Seller. Seller covenants not to apply any security
deposits against outstanding tenant obligations between the date
hereof and the day following the Closing Day, without the consent
of Purchaser. In the event that any tenant has established a
letter of credit for the benefit of Seller in lieu of a security
deposit and the same is not otherwise transferable to Purchaser at
Closing (any such letter of credit being referred to as a
"Security Letter of Credit") then Seller agrees to cooperate with
Purchaser as hereinafter set forth in order to enable Purchaser to
realize, to the extent appropriate and reasonably practicable, the
benefits intended to be afforded to the owner of the Real Property
by such Security Letters of Credit. In furtherance of the
foregoing, if Purchaser in good faith believes that it has a bona
fide right under a Lease to all or a portion of the funds
represented by any such Security Letter of Credit, Purchaser shall
send Seller a written affidavit from an officer of Purchaser,
specifying the nature of the tenant default giving rise to
Purchaser's claim and setting forth the amount that Purchaser
desires Seller to claim against the Security Lender of Credit.
Upon receipt of such an affidavit, Seller shall make a claim
against the applicable Security Letter of Credit and shall forward
to Purchaser any proceeds received as a result of such claim
promptly upon receipt thereof. Purchaser shall indemnify Seller in
connection with the foregoing actions as described in Section 11.2
hereof. In the event that any additional rent or the calculation
thereof is subject to adjustment pursuant to the terms and
provisions of any Lease (e.g., year-end adjustments to escalation
charges, tenant audits, and the like), then, after the amount of
such additional rent is finally determined by Purchaser (which
determination shall be reasonably made and subject to the
reasonable approval of Seller), the parties shall make
429961.8
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the proper adjustments so that the proration will be accurate
based upon the actual amount of such additional rent collected for
the period in question, and payment shall be made promptly to
Purchaser or Seller, whichever may be entitled to such payment, by
the other party for the purpose of making such adjustment.
(c) Utilities: Charges and assessments for sewer and water and
other utilities, including charges for consumption of electricity, steam and gas
shall be apportioned by Purchaser and Seller.
(d) Adjustment of Contracts: Except as provided in Subsection
8.l(e) below, payments required or received under all Contracts shall be
apportioned by Purchaser and Seller.
(e) Certain Leasing Costs: Except as may be expressly set forth to
the contrary in this Subsection 8.1(e), Purchaser shall be responsible for all
costs and expenses required to be paid after the Closing in respect of all
Leases (whether or not entered into prior to the Closing), including, without
limitation, tenant improvement construction contracts, tenant improvement
allowances to tenants, and leasing or other brokerage commissions. As to certain
specific Leases or space, in addition to any other prorations and adjustments
made hereunder, the parties agree as follows:
(i) Purchaser will assume the economic effect of any "free
rent" under the Lease with Arthur Andersen LLP from and after the
Closing; and
(ii) Seller will be responsible for and pay any currently
outstanding leasing commissions for the space presently leased by
Purchaser, Arthur Andersen LLP and Gadsby & Hannah LLP and any
leasing commissions shown on Exhibit 3.9 with respect to space on
the 28th or 29th Floors; provided, however, that Purchaser will be
responsible for and pay any commissions payable on the renewal of
any of such Leases or the expansion or extension of any space
under any of those Leases; and
(iii) Purchaser will be responsible for all capital costs,
tenant improvement costs, relocation costs, temporary leasing
costs, leasing commissions, legal, design and other professional
fees, and other expenses (including, without limitation, those
matters set forth on Exhibit 8.1 attached hereto and made a part
hereof) attributable to, and shall assume the economic effect of
any "free rent" or other concessions pertaining to the period from
and after the Closing Date and relating to:
(aa) the leasing of space on the 17th and 20th Floors of
the building located on the Real Property, including, without
limitation, the cost of refitting the 20th Floor for
multi-tenant usage; provided, however, that Purchaser will not
be obligated to reimburse Seller for any tenant improvement
costs previously incurred by Seller with respect to the space
on the 17th Floor currently occupied by LaSalle, and
429961.8
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(bb) the expansion of the space occupied by Fish &
Richardson P.C. so as to include (1) the "Second Expansion
Space" under that certain Agreement of Lease, dated June 1,
1990 by and between Seller and Fish & Richardson P.C., as
amended, and (2) 10,068 square feet on the 20th Floor
(including, without limitation, any temporary or permanent
relocation of the tenant(s) occupying such additional space).
To the extent that Seller has paid any of the items set forth on Exhibit 8.1
prior to Closing, Purchaser will reimburse Seller for such items at Closing upon
presentation of an invoice therefor. Purchaser will pay all other costs and
expenses described in this Subsection 8. l(e)(iii) as and when the same are due.
(f) Other: Any other items of income and expense shall be prorated
between Purchaser and Seller.
(g) Payment of Apportionment. Any net credit payable by Purchaser
to Seller or by Seller to Purchaser as a result of the foregoing prorations
shall be paid at Closing to the extent determinable as of the Closing Date by
wire transfer of immediately available funds.
(h) Post-Closing Cooperation. After the Closing, Purchaser and
Seller shall cooperate with each other, and shall cause their respective
property managers and advisors to cooperate with each other, including, without
limitation, making available books and records for the Subject Property, in
order to respond to any tenant inquiry concerning, challenge to, or audit of any
operating expense or similar additional rent or rent escalation item. To the
extent that any adjustment or proration required hereunder was based on
estimates at the time of Closing, the parties shall readjust and re-prorate
based upon final numbers, when available, and make payment as appropriate or as
otherwise provided herein based upon such readjustment and reproration.
Purchaser and Seller agree to use reasonable efforts to finalize all prorations
on or before the first anniversary of the Closing Date.
429961.8
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ARTICLE 9.
CONDEMNATION AND CASUALTY
-------------------------
9.1. Procedure Upon Substantial Condemnation. Fire or Other Casualty.
In the event that, prior to Closing, the Subject Property is condemned in whole
or in part or is damaged by fire or other casualty, Seller shall promptly notify
Purchaser in writing of such event. If, prior to Closing, ten percent (10%) or
more of the Subject Property is condemned or is conveyed under the threat of
condemnation, or if the Subject Property is damaged by fire or other casualty to
the extent that the cost of repairing such damage shall be $5,000,000.00 or
more, then, and in any of such events, Purchaser (a) may terminate this
Agreement by notice in writing to Seller delivered prior to Closing (but in no
event later than the tenth (10th) day after the occurrence thereof), and
thereupon the parties shall be released and discharged from any further
obligations to each other except as described in Section 13.3, this Agreement
shall become null and void, and the Earnest Money shall be refunded to
Purchaser; or (b) may proceed to Closing, in which event the Purchase Price
shall be reduced by the total of any awards or other proceeds received by Seller
on or before the Closing Date with respect to any such condemnation, fire or
other casualty (as applicable) and, at Closing Seller shall assign to Purchaser
all of Seller's right to any and all awards or other proceeds paid or payable
thereafter by reason of any such taking, fire or other casualty (as applicable).
Seller shall be responsible, however, for the payment of any deductible due in
connection with any such insurance proceeds. In each case, Seller shall have no
responsibility for the restoration or repair of that portion of the Subject
Property condemned, destroyed or damaged as aforesaid.
9.2. Procedure Upon Insubstantial Condemnation. Fire or Other Casualty.
Except as may be set forth in Section 9.1 above, if prior to Closing, a portion
of the Subject Property is condemned or is damaged by fire or other casualty,
then the parties shall proceed to Closing, but the Purchase Price shall be
reduced by the total of any awards or other proceeds received by Seller on or
before the Closing Date with respect to any such condemnation, fire or other
casualty (as applicable) and, at Closing, Seller shall assign to Purchaser all
of Seller's right to any and all awards or other proceeds paid or payable
thereafter by reason of any such taking, fire or other casualty (as applicable).
Seller shall be responsible for the payment of any deductible due in connection
with any such insurance proceeds. Seller shall have no responsibility for the
restoration and repair of any portion of the Subject Property condemned,
destroyed or damaged as aforesaid.
ARTICLE 10.
OPERATION OF SUBJECT PROPERTY
10.1. Pre-Closing Operations of Property. Between the date hereof
and Closing:
(a) Modification of Leases: Except as contemplated by
Exhibit 1.4, Seller shall not modify or terminate any of the Leases without the
prior written consent of the Purchaser. Unless Purchaser shall notify Seller in
writing within ten (10) days after receipt by Purchaser
429961.8
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of written notice of such proposed modification or termination (such notice to
include a copy of all documentation relating thereto) of Purchaser's objection
thereto, Purchaser shall be deemed to have consented thereto;
(b) New Leases: Except as contemplated by Exhibit 1.4,
Seller shall not enter into any new leases or tenancies with respect to the Real
Property without the prior written consent of the Purchaser. Unless Purchaser
shall notify Seller in writing within ten (10) days after receipt by Purchaser
of a copy of the proposed new lease or tenancy of Purchaser's objection thereto,
Purchaser shall be deemed to have consented thereto;
(c) Maintenance: Subject to the provisions of Article 9 and
the provisions of any Leases, any repairs and replacements to the Real Property
made prior to Closing shall be made by and at the expense of Seller. Seller
shall not diminish the quality or quantity of maintenance and upkeep services
heretofore provided by Seller to the Real Property;
(d) Encumbrances: Seller shall not grant or permit any new
encumbrances on or about the Real Property without the prior written consent of
Purchaser; and
(e) Other Acts: Seller shall not take or omit to take any
other act that might have a material and adverse effect on the Real Property, or
the operations thereof as presently conducted.
10.2. Condition to Closing. Except for events described in Article 9,
the absence of any material and adverse deterioration in the condition of the
Subject Property between the date hereof and the Closing Date shall be an
express condition to Purchaser's obligation to consummate the transactions
contemplated herein.
ARTICLE 11.
INDEMNIFICATION
---------------
11.1. Indemnification by Seller. Seller shall indemnify and hold
Purchaser harmless against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable attorneys' fees and expenses and related costs,
expenses of litigation, judgments and any other costs, fees and expenses
resulting from (a) a breach of a representation or warranty made by Seller under
this Agreement; or (b) an action, suit or proceeding brought or filed against
Seller or Purchaser, based on acts or omissions of Seller occurring prior to the
Closing Date, or any conditions or occurrences existing prior to the Closing
Date.
11.2. Indemnification by Purchaser. Purchaser shall indemnify and hold
Seller harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable attorneys' fees and expenses and related costs, expenses
of litigation, judgments and any other costs, fees and expenses resulting from
(a) a breach of a representation or warranty made by Purchaser under this
Agreement; (b) an action, suit or proceeding brought or filed against Seller or
429961.8
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<PAGE>
Purchaser, based on acts or omissions of Purchaser occurring from and after the
Closing Date, or any conditions or occurrences existing from and after the
Closing Date (including, without limitation, any of the foregoing arising out of
or related to the ACM that is present at the Real Property from and after the
Closing Date); or (c) an action, suit or proceeding brought or filed against
Seller or Purchaser, based on Seller's good faith compliance with its
obligations to Purchaser under Subsection 8.1(b)(ii) hereof.
ARTICLE 12.
DEFAULT
-------
12.1. Default: Liquidated Damages. Purchaser and Seller acknowledge
that it would be extremely impracticable and difficult to ascertain the actual
damages that would be suffered by Seller if Purchaser fails to consummate the
purchase and sale contemplated herein (for any reason other than Seller's
failure, refusal or inability to perform any of its covenants and agreements
hereunder or the failure of any other of the conditions precedent to Purchaser's
obligation to close hereunder). Purchaser and Seller have considered carefully
(a) the loss as a consequence of the negotiation and execution of this
Agreement, including, without limitation, Seller's termination of discussions
with other parties who have expressed an interest in acquiring the Subject
Property; (b) the expenses of Seller incurred in connection with the preparation
of this Agreement and Seller's performance hereunder; and (c) the other damages,
general and special, that Purchaser and Seller realize and recognize Seller
would sustain, but that cannot be calculated with reasonable certainty, in the
event of any failure by Purchaser as aforesaid. Based on all those
considerations, Purchaser and Seller have agreed that the aggregate damage to
Seller in such an event would reasonably be expected to be equal to TWO MILLION
SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,750,000.00) (the "Liquidated
Damages").
Accordingly, if all conditions precedent to Purchaser's obligation to
consummate the transactions herein contemplated have been waived by Purchaser or
satisfied and if Seller has performed its respective covenants and agreements
hereunder, but Purchaser has breached its covenants and agreements hereunder and
has failed, refused or is unable to consummate the purchase and sale
contemplated herein by the Closing Date, then Escrow Agent shall pay the Earnest
Money to Seller as full and complete liquidated damages and as Seller's sole
remedy for such default by Purchaser at law and in equity other than as
described in Section 12.2 hereof. Upon payment by Escrow Agent of the Earnest
Money to Seller as above provided, no party to this Agreement shall have any
liability to any other party in connection with this Agreement except as
described in Section 13.3 hereof, and this Agreement, in its entirety, shall be
deemed to be null, void and of no further force and effect.
429961.8
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If Seller has breached any of its covenants and agreements under this
Agreement and/or has failed, refused or is unable to consummate the purchase and
sale contemplated herein by the Closing Date, then Escrow Agent shall return the
Earnest Money to Purchaser; provided, however, that such return shall not limit
Purchaser's right to maintain an action for specific performance.
If any condition precedent to Purchaser's obligation to consummate the
purchase and sale contemplated herein has not been waived by Purchaser or
satisfied by the Closing Date and if neither Seller nor Purchaser has breached
its covenants and agreements hereunder, then Escrow Agent shall return the
Earnest Money to Purchaser. Upon payment of the Earnest Money to Purchaser as
above provided, no party to this Agreement shall have any liability to any other
party in connection with this Agreement except as described in Section 13.3
hereof, and this Agreement, in its entirety, shall be deemed to be null, void
and of no further force and effect.
12.2. Amendment of SSB Lease. The parties acknowledge that they have
entered into this Agreement in accordance with the right of first offer
provisions of Subsection 24.l(b) of the SSB Lease, and that Seller has acted in
reliance thereon, including, without limitation, the termination of discussions
with other parties who have expressed an interest in acquiring the Subject
Property. Accordingly, in addition to the payment of the Liquidated Damages
described in Section 12.1 above, in the event that Purchaser defaults in its
obligations hereunder, the parties hereto, as parties to the SSB Lease, hereby
agree that (a) Article XXIV of the SSB Lease will be deemed to be automatically
amended without the requirement of any additional action by either party hereto,
so that, notwithstanding any provisions to the contrary contained in Article
XXIV of the SSB Lease (i) Purchaser's rights under said Article XXIV shall be
deemed suspended for a period of five (5) years from the date of Purchaser's
notice of its exercise of the right of first offer contained in Subsection
24.l(b) of the SSB Lease; and (ii) Seller shall be free to sell the Subject
Property to any third party offeror, subject, however, to the conditions of
Subsection 24.l(d); and (b) Purchaser shall be deemed, by the execution of this
Agreement, to have expressly released Seller and its successors and assigns from
any and all obligations of "Landlord" under the terms of the Work Agreement.
ARTICLE 13.
MISCELLANEOUS PROVISIONS
------------------------
13.1. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior understandings or agreements between the parties
with respect to the transactions contemplated herein; provided, however, that
this Agreement is not intended to modify or amend the SSB Lease except as
contemplated by Section 12.2 hereof; provided further, however, that from and
after the Closing, Purchaser shall have assumed all of the obligations of the
"Landlord" under the SSB Lease and shall have released Seller therefrom, all as
contemplated by Article 7 hereof.
429961.8
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13.2. Binding Effect. Subject to the provisions of Section 13.10
hereof, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective heirs, devisees, personal representatives,
successors and permitted assigns.
13.3. Survival.
(a) Notwithstanding anything to the contrary provided herein,
each and every representation, warranty or acknowledgment contained in this
Agreement and each indemnification, covenant and/or other obligation contained
in Subsection 2.l(a) and Section 7.7 hereof shall survive the Closing and shall
not merge into the documents delivered at the Closing, but instead shall be
independently enforceable except to the extent expressly limited herein;
provided, however, that (i) each of the representations and warranties of Seller
contained in this Agreement shall terminate nine (9) months after the Closing
Date; and (ii) the indemnifications contained in Article 11 (except for the
indemnification contained in Subsection 11.2(c)) of this Agreement shall
terminate nine (9) months after the Closing Date. No party to this Agreement
shall be permitted to make any claim against any other party for breach of
representation or warranty unless the amount claimed in good faith by the
claiming party exceeds in the aggregate Seven Hundred Fifty Thousand and No/100
Dollars ($750,000.00).
(b) Furthermore, notwithstanding anything to the contrary
provided herein, if, for any reason whatsoever, this Agreement is terminated
prior to the Closing of the acquisition contemplated herein, the
indemnifications, covenants and/or other obligations contained in Subsection
2.1(a), Section 7.7 and Article 12 hereof shall survive any such termination of
this Agreement and shall be independently enforceable except to the extent
expressly limited hereby.
13.4. Waiver: Modification. Failure by Purchaser or Seller to insist
upon or enforce any of its rights shall not constitute a waiver thereof. Either
party hereto may waive the benefit of any provision or condition for its benefit
contained in this Agreement. No oral modification hereof shall be binding upon
the parties, and any modification shall be in writing and signed by the parties.
13.5. Time of Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT AND
EVERY PROVISION CONTAINED HEREIN.
13.6. Construction. Each party hereto hereby acknowledges that all
parties hereto participated equally in the drafting of this Agreement and that,
accordingly, no court construing this Agreement shall construe it more
stringently against one party than the other.
13.7. Governing Law. This Agreement shall be governed by, and construed
under, the laws of the Commonwealth of Massachusetts.
13.8. Date Hereof. For purposes of this Agreement, the phrase "date
hereof" or similar language shall mean the date first above written.
429961.8
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13.9. Assignment.
(a) Purchaser may not assign its interest in this Agreement, in
whole or in part, to any party without the prior written consent of Seller
except as contemplated by Section 7.2 hereof. No such assignment, if permitted,
shall release Purchaser from its obligations hereunder.
(b) Seller shall not assign this Agreement, in whole or in part,
without the prior written consent of Purchaser except as contemplated by Section
7.2 hereof. Escrow Agent shall not assign its rights, duties or obligations
hereunder in whole or in part, without the prior written consent of Seller and
Purchaser.
13.10. No Third Party Beneficiary.
(a) The parties acknowledge and agree that this Agreement creates
a direct contractual relationship only between Seller and Purchaser and no other
party shall have any direct or indirect rights, contractual or otherwise, with
respect to either Seller or Purchaser in connection with this Agreement or shall
be deemed to be a third party beneficiary of this Agreement.
(b) At Purchaser's request, Seller shall deliver the deed
described in Subsection 7.4(a) to State Street South Corp., State Street Credit
Corp., or any other affiliate provided that (i) one hundred percent (100%) of
the stock of any such transferee is owned by or under common control with
Purchaser, and (ii) Seller and/or the common owner of Seller and such
transferee, as applicable, intend in good faith to continue to own all of such
stock for the reasonably foreseeable future; provided further, however, that the
parties acknowledge and agree that in the event that Seller delivers such deed
or other items or documentation to any such commonly controlled entity as an
accommodation to Purchaser at Purchaser's request, (aa) the grantee of the deed
shall execute an acknowledgment in form and substance reasonably satisfactory to
Seller, confirming such grantee's acknowledgment and acceptance of the matters
and limitations described in Article 2 hereof; and (bb) no such delivery (1)
shall create in any manner whatsoever any privity of contract or other
contractual or other relationship or rights between Seller and such third party,
or (2) shall modify, amend, rescind or nullify in any manner whatsoever the
rights and obligations between Seller and Purchaser that are created by this
Agreement.
13.11. Section Headings. The Section headings as herein used are for
convenience or reference only and shall not be deemed to vary the content of
this Agreement or the covenants, agreements, representations and warranties
herein set forth or to limit the provisions or scope of any Section.
13.12. Counterparts. This Agreement may be executed in any one or more
counterparts, each of which, when taken together, shall constitute an original
hereof.
429961.8
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ARTICLE 14.
NOTICES, ETC.
-------------
14.1. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be personally delivered, or sent by
overnight commercial delivery service (provided a receipt is available with
respect to such delivery), or mailed by first-class registered or certified
mail, return receipt requested, postage prepaid (and shall be effective when
received, if sent by personal delivery or by overnight delivery service, or on
the third day after mailing, as evidenced by return receipt, if mailed):
(a) if to Purchaser:
SSB Realty, Inc.
P. O. Box 351
Boston, Massachusetts 02101
Attn: President
with a copy to:
Peabody & Arnold
50 Rowes Wharf
Boston, Massachusetts 02110-3342
Attn: Michael Glazerman, Esquire
(b) If to Seller:
c/o CGR Advisors
950 East Paces Ferry Road
Suite 2275
Atlanta, Georgia 30326-1119
Attention: President
with a copy to:
Arnall Golden & Gregory, LLP
1201 West Peachtree Street
Suite 2800
Atlanta, Georgia 30309-3450
Attention: J. Grant Wilmer, Jr.
429961.8
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(c) If to Escrow Agent:
Old Republic National Title Insurance Company
Three Center Plaza
Suite 440
Boston, Massachusetts 02108
Attention: Jay Mahaney, Esquire
Rejection or other refusal by the addressee to accept or the inability of the
United States Postal Service to deliver because of a changed address of which no
notice was given shall be deemed to be receipt of the notice sent. Upon ten (10)
days' prior written notice given pursuant to this Section 14.1, any party may
change its address for notices hereunder from time to time.
[Remainder of Page Left Blank Intentionally]
429961.8
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ARTICLE 15.
EXECUTION
---------
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
as of the day and year first above written.
PURCHASER:
----------
SSB REALTY, INC.
By: /s/ Theodore F. Cataldo
-------------------------------------
Its: President
-------------------------------------
[CORPORATE SEAL]
DATE OF EXECUTION: May 22, 1997
------------
[Signatures Continued]
429961.8
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<PAGE>
SELLER:
-------
HEXALON REAL ESTATE, INC.
By: /s/ J.W. Smith, III
-------------------------------------
Its: Vice President
-------------------------------------
[CORPORATE SEAL]
DATE OF EXECUTION: 5/22/97
[Signatures Continued]
429961.8
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ESCROW AGENT:
-------------
OLD REPUBLIC NATIONAL TITLE
INSURANCE COMPANY
By: /s/ John A. Mahaney
-------------------------------------
Its: Counsel
-------------------------------------
[CORPORATE SEAL]
DATE OF EXECUTION: May 22, 1997
429961.8
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MEMORANDUM OF AGREEMENT
April 16, 1997
Beacon Properties L.P. ("Beacon") understands that SSB Realty, Inc. ("State
Street") has received from the owner (the "Seller") of the building commonly
known as and numbered 225 Franklin Street, Boston, Massachusetts (the
"Property") a notice pursuant to Subsection 24.1(b) of State Street's lease that
Seller intends to sell the Property. Pursuant to said subsection of the lease,
State Street is entitled to signify its willingness to purchase the Property by
so notifying Seller not later than April 18, 1997.
State Street is willing to provide such notice based upon and in consideration
of the following agreements between State Street and Beacon:
A. Beacon will lend to State Street an amount equal to the purchase price
required to close the transaction, repayment of which shall be secured by a
first mortgage on the Property. Said loan shall be for a period of
thirty-six (36) months calling for monthly payments of interest only, which
interest shall be at an annual rate equal to the rate of interest offered
by State Street Bank and Trust Company, from time to time, to its prime
commercial real estate borrowers. Any accrued interest and all principal
shall be due at maturity.
State Street shall have the right to sell the Property to Beacon and to
require Beacon to purchase same, upon written notice from State Street to
Beacon, subject to the above financing for a purchase price equal to the
amount of the financing to which the Property is then subject, plus an
amount set forth in a separate letter of this date between Beacon and State
Street.
Beacon shall have the right to purchase the Property from State Street and
to require State Street to sell same, upon written notice from Beacon to
State Street, subject to such financing for a purchase price equal to the
amount of the financing to which the Property is then subject, plus an
amount set forth in a separate letter of this date between Beacon and State
Street.
Either of said purchase and sale transactions shall be substantially on the
same terms and conditions as the purchase and sale transaction pursuant to
which State Street acquired title to the Property from Seller, except as
herein modified.
In any event, upon acquisition of title, State Street will take all steps
necessary to be certain that State Street's leasehold estate in a portion
of the Property does not merge with State Street's ownership of the
Property.
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<PAGE>
B. After Seller's receipt of such notice from State Street, Seller and State
Street are to proceed in good faith to finalize the terms and conditions
for the purchase and sale of the Property. Beacon and State Street shall
cooperate with each other such that the terms and conditions to be agreed
upon by Seller and State Street will be acceptable to Beacon. Although
negotiations of the Purchase and Sale Agreement have not commenced, it is
anticipated by Beacon and State Street that the Purchase and Sale Agreement
will afford to the purchaser the opportunity to conduct commercially
reasonable due diligence and to terminate the obligation to consummate the
purchase and sale transaction if the purchaser is dissatisfied with the
results of its investigations.
C. Promptly following the aforesaid notice from State Street to Seller, and as
soon as and to the extent Beacon or State Street is legally able so to do,
Beacon will, on behalf of itself and of State Street, conduct its customary
due diligence of the Property in order to determine whether the Property is
suitable for purchase, using Beacon's own standards of due diligence as
though Beacon were purchasing the Property for its own account. All third
party reports furnished or made available to Beacon shall be similarly
furnished and made available to State Street.
D. Reference is made to that certain Non-Disclosure Agreement dated April 1,
1997, executed by Beacon Properties Acquisition, LLC in favor of SSB Realty
Co., Inc. [sic] and intending to be in favor of State Street (the
"Non-Disclosure Agreement"). The terms and provisions of the Non-Disclosure
Agreement are hereby ratified and confirmed by Beacon and are intended to
survive the execution of this Memorandum of Agreement, regardless whether
the transaction contemplated is closed.
Beacon further agrees that if the transaction contemplated by this
Memorandum of Agreement is not consummated, Beacon will not use the
Material (as defined in the Non-Disturbance Agreement) to Beacon's
advantage in any manner which is adverse to the Seller or any ultimate
purchaser of the Property. The indemnity set forth in the Non-Disclosure
Agreement shall also be considered applicable to the foregoing sentence.
E. State Street agrees that it will not exercise any right which it may have
to terminate the Purchase and Sale Agreement for the Property unless Beacon
shall have consented to such termination. If Beacon elects not to go
forward with the transaction contemplated by this Agreement at a time when
State Street shall have the right to terminate the Purchase and Sale
Agreement without incurring liability for damages to perform, State Street
shall either terminate said Agreement at the request of Beacon or, if State
Street elects to go forward, shall release Beacon from any and all
obligations hereunder except the indemnification obligations and the
obligations set forth in the Non-Disclosure Agreement which expressly
survive the termination of this Memorandum of Agreement. Furthermore,
Beacon hereby indemnifies State Street from any and all loss, cost or
damage arising from
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<PAGE>
(i) State Street's failure to enter a Purchase and Sale Agreement upon
request of Beacon or due to requirements imposed by Beacon, or (ii) State
Street's termination of such Purchase and Sale Agreement upon request of
Beacon or due to requirements imposed by Beacon.
Executed on the date set forth above.
SSB Realty, Inc.
By: /s/ Thomas F. Cataldo
----------------------------
Beacon Properties, L.P.
President
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation,
General Partner
By: /s/ Charles Cremens
-------------------------
Charles Cremens
Senior Vice President
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SECOND AMENDMENT TO MEMORANDUM OF AGREEMENT
On April 16, 1997, Beacon Properties, L.P. ("Beacon") and SSB Realty, Inc.
("State Street") entered into a Memorandum of Agreement and a Letter Agreement
(collectively, the "Agreement") with respect to the property at 225 Franklin
Street, Boston, Massachusetts (the "Property"). The Agreement contemplated that,
at Beacon's request, State Street would exercise its right of first refusal for
the purchase of the Property, and that Beacon would either make a loan to State
Street to purchase the Property or accept an assignment of State Street's rights
under the purchase and sale agreement with the owner of the Property (the
"Seller"). The Agreement was heretofore modified by an instrument (the First
Amendment") entitled "Amendment to Memorandum of Agreement" dated May 22, 1997.
Since April 16, 1997, Beacon and State Street have worked together to
perform due diligence with respect to the Property and to negotiate a purchase
and sale agreement with the Seller. State Street, at Beacon's request, has
entered into a purchase and sale agreement with the Seller (the "Purchase and
Sale Agreement"). The Purchase and Sale Agreement prohibits an assignment
thereof, but Seller has agreed to allow State Street to designate Beacon as the
party to accept title to the Property. In recognition of the modification to the
structure of the transaction and to clarify further the rights and obligations
of the parties, State Street and Beacon hereby agree as follows:
1. This instrument is intended to, and does, supersede and restate the
Amendment. The Amendment is no longer of any force or effect.
2. Beacon has tendered the required earnest money under the Purchase and
Sale Agreement. In the event the purchaser under the Purchase and Sale Agreement
receives a return of the earnest money, the earnest money shall be returned to
Beacon immediately.
3. State Street hereby assigns to Beacon its right to purchase the Property
pursuant to the Purchase and Sale Agreement and agrees to designate Beacon as
the party to take title to the property.
4. State Street has delivered to Beacon estoppel letters in the form
attached hereto as Exhibit A and acknowledges and agrees that Beacon may rely on
said estoppel letters in connection with its purchase of the Property.
5. If the transaction contemplated closes, Beacon shall be obligated to pay
the entire Purchase Price required by the Purchase and Sale Agreement and
perform all other obligations of Purchaser thereunder. Furthermore, in such
event, the remaining Five Million Dollars ($5,000,000) will be paid as set forth
and at the times set forth in the Agreement.
<PAGE>
6. If Purchaser shall have defaulted in its obligations under the Purchase
and Sale Agreement and such default shall be the fault of Beacon and, as a
result thereof, pursuant to Section 12.2 of the Purchase and Sale Agreement,
State Street's first refusal rights under its Lease are suspended and State
Street is deemed to have released Seller from all obligations of Landlord under
the terms of the Work Agreement, the following shall occur. Immediately
following such default, Beacon shall pay to State Street One Million Dollars
($1,000,000) as full liquidated damages at law and in equity to compensate State
Street for the release of Seller from any and all obligations of Landlord under
the terms of the Work Agreement. In addition, if the Property is sold during
said five-year period such that State Street's right of first refusal otherwise
would have been triggered, Beacon shall, within ten (10) days of notice thereof
from State Street, pay to State Street Five Million Dollars ($5,000,000).
The Five Million Dollar payment is intended to be full liquidated damages
for such breach by Beacon on account of the suspension of the right of first
refusal and State Street shall have no further recourse against Beacon at law or
in equity on account thereof.
7. Nothing contained in the Purchase and Sale Agreement shall be construed
to have modified any liability or obligation which landlord or tenant under the
State Street Lease may have to each other from and after the closing date.
8. In the event that State Street is the assignee of any obligations of the
Seller pursuant to any of the documents executed incident to this transaction,
Beacon hereby agrees to indemnify and hold State Street harmless from and
against any and all liabilities, costs, damage and expense which State Street
may incur by reason of such assignments. State Street further agrees that it
shall assign to Beacon, subject to such agreement to indemnify, all rights
acquired by State Street pursuant to any such assignments.
9. If the transaction contemplated hereby is closed and Beacon is the
purchaser of the Property, Beacon and State Street agree with each other as
follows:
A. Beacon and State Street shall negotiate, in good faith, agreements relating
to the utility shaft serving the Property and in which there is located
asbestos containing materials ("ACM"). One such agreement shall be a
Disaster Relief Plan. Another such agreement shall be an Operations and
Management Program which shall provide, inter alia, for testing of the ACM
in the shaft and the utilities and lines which run through said shaft and
such other testing programs and control programs which are prudent and
appropriate in this situation. The third such agreement shall be a
so-called "Capital Plan," which shall ensure, for the integrity of the
building and the safety of its occupants, that the utilities and other
lines and ducts contained in said shaft will be removed or replaced within
a reasonable time prior to the ends of the useful lives thereof, such
useful lives and the
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<PAGE>
need for removal, replacement or other reasonable modifications to be
determined taking into account all relevant factors, including then most
recent available testing and manufacturers' data concerning same.
In the event that State Street and Beacon are unable to agree upon any of
such agreements, the matter in dispute shall be resolved by arbitration in
accordance with the arbitration provisions currently in effect in the Work
Agreement referred to in State Street's Lease.
Furthermore, the agreements themselves will provide for a similar
arbitration dispute resolution mechanism.
B. Upon the mutually satisfactory resolution of all of the foregoing
agreements or the determination of the arbitrators, State Street shall
agree that Final Completion under the Work Agreement has occurred and shall
so signify to Beacon in accordance with the terms of the said Work
Agreement.
C. Nothing herein contained shall be construed to limit the ongoing
obligations of the Landlord as to "Remaining Building ACM" and "Remaining
Premises ACM" (as defined in the State Street Lease) pursuant to Section
11.3(b) of the State Street Lease. The parties hereto will negotiate in
good faith a new Operations and Management Program to update the existing
Operations and Management Program referred to in the State Street Lease.
D. Beacon has been advised that State Street currently utilizes certain
telecommunications equipment and is presently paying Seller Five Thousand
Dollars ($5,000) per month for the right so to do. The parties hereto agree
that, promptly following Beacon's acquisition of the Property, either the
State Street Lease will be modified to reflect such rights and such
payments or the foregoing arrangements will otherwise be memorialized in
writing in a manner satisfactory to Beacon and State Street.
10. Beacon and State Street recognize that Beacon is not a third party
beneficiary to the Agreement. Notwithstanding the foregoing, however, State
Street, subject to the limitations set forth hereinbelow, represents and
warrants to Beacon, without investigation (which representation and warranty is
hereinafter referred to as the "State Street Representation and Warranty"), that
each and every of the representations and warranties of Hexalon to State Street
under the Agreement is true and correct on the date hereof and will be true and
correct on the closing date.
Notwithstanding the foregoing, however, Beacon and State Street further
agree that Beacon's recourse against State Street with respect to any breach of
the State Street
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<PAGE>
Representation and Warranty shall be limited solely to those net amounts which
are recovered from Hexalon on account of the breach of any such representation
and warranty by Hexalon as provided below. Beacon agrees that it will not seek
any other relief, at law or in equity, from State Street on account of any
breach of the State Street Representation and Warranty.
At the request of Beacon and in reliance on the indemnity hereinafter set
forth, State Street hereby grants to Beacon the right, at no cost or expense to
State Street, to bring, in State Street's name, any and all such proceedings
necessary, in good faith, to enforce State Street's rights in connection with a
breach of Hexalon's representations and warranties to State Street, using
counsel selected by Beacon. Beacon agrees to keep State Street informed as to
any such action so brought and the status thereof, from time to time, and, upon
the request of State Street, at any reasonable time.
11. Beacon hereby agrees to indemnify and hold harmless State Street from
and against any and all liability, cost, damage and expense incurred by State
Street in bringing proceedings at Beacon's directions or in connection with
proceedings brought in State Street's name by Beacon.
12. Beacon and Seller acknowledge that Beacon may desire to structure
Beacon's acquisition of the Property in a manner intended by Beacon to
constitute a deferred exchange of the Property for property of a like kind that
is described in Section 1031 of the Internal Revenue Code of 1986, as amended
(an "Exchange"). State Street agrees to cooperate with Beacon, at no cost or
expense to State Street, in so structuring such transaction and acknowledges
that Beacon may assign this instrument to an entity which Beacon shall have
designated to serve as a "qualified intermediary" for the sole purpose of
enabling Beacon to effect such an Exchange. No such assignment shall affect the
rights or obligations or indemnifications of any party hereto under this
Agreement, and Beacon's ability to consummate an Exchange shall not be a
condition to the obligations of Beacon hereunder.
Neither party hereto is or shall be responsible for any of the tax
consequences of this transaction to the other party and State Street shall not
be required to incur any additional cost, expense or liability as a result of
any Exchange consummated for the benefit of Beacon.
13. Either party hereto may designate an entity to perform any obligation
to be performed by such party hereto, but the designation of such entity shall
not relieve any party hereto of its obligations hereunder.
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<PAGE>
14. Except as modified herein, all other provisions of the Agreement shall
remain in full force and effect.
EXECUTED UNDER SEAL, this 3rd day of June, 1997.
SSB REALTY, INC.
By:/s/ Thomas F. Cataldo
-----------------------------
Its President
hereunto duly authorized
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation,
Its General Partner
By:/s/ Charles H. Cremens
------------------------------
Its Senior Vice President
Hereunto duly authorized
-5-
Beacon Properties, L.P.
50 Rowes Wharf
Boston, Massachusetts 02110
April 16, 1997
SSB Realty, Inc.
c/o State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Re: 225 Franklin Street
Gentlemen:
We have today entered into a Memorandum of Agreement with respect to your
proposed purchase and the proposed financing of 225 Franklin Street. This letter
is the letter agreement referred to in the Memorandum of Agreement.
This letter confirms that we have agreed that Beacon Properties, L.P., at
such time as it purchases the property in accordance with the Memorandum, will
pay to SSB Realty, Inc. the additional sum of $5,000,000, of which $3,000,000
shall be paid at Closing and $1,000,000 on each of the first and second
anniversary dates of the Closing. If either payment is not made when due, in
addition to any other remedies, you shall have the right to offset rent
otherwise due under your lease. The lease will be amended to reflect this right.
The $5,000,000 shall be absolutely net to you (other than your counsel fees);
for example, any transfer taxes or title insurance premiums, if incurred, shall
be borne by us.
Furthermore, notwithstanding the provisions of the Memorandum of Agreement,
provided that the Purchase and Sale Agreement between the seller and you does
not preclude the same, you shall assign to us all of your right, title and
interest in and to the Purchase and Sale Agreement in consideration of our
agreement to pay to you the amount set forth in the preceding paragraph at the
times set forth therein. In the event of such assignment to us, we will
indemnify and hold you harmless from and against our failure to perform under
the Purchase and Sale Agreement. In the event that the purchase price with the
Seller is reduced below $275,000,000 for any reason other than reductions based
upon the need for capital improvements or deferred maintenance discovered during
the due diligence period, we will pay you at Closing one third of any such
reduction.
We also agree with you that in the event we acquire the Property pursuant
to this letter or the Memorandum of Agreement we will fulfill the obligations of
the landlord under your Lease and the Landlord and Tenant Work Agreement with
respect to asbestos containing materials. You agree to provide an estoppel
letter confirming the rent, the lease expiration date, options and the fact of
no outstanding landlord defaults under all of your leases and work agreement,
and such other matters as we may mutually agree.
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<PAGE>
Please confirm by executing the enclosed counterpart of this letter.
Very truly yours,
Beacon Properties, L.P.
By: Beacon Properties Corporation,
General Partner
By: /s/ Charles H. Cremen
----------------------------
Charles H. Cremens
Senior Vice President
Agreed to and Confirmed
SSB Realty, Inc.
By: /s/ Thomas F. Cataldo
--------------------------
Thomas F. Cataldo
President
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Beacon Properties Corporation on Form S-3 (File Nos. 33-96736, 333-05707,
333-21787, 333-21769 and 333-25901) and Form S-8 (File Nos. 33-88606 and
333-19603) of our audit report dated May 29, 1997 on our audit of the statement
of excess of revenues over specific operating expenses of 225 Franklin Street in
Boston, Massachusetts for the year ended December 31, 1996, which report is
included in this Form 8-K.
/s/ COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 4, 1997
