EXHIBIT 10.54
MASTER AGREEMENT
by and between
New York State Common Retirement Fund
and
Boston Properties Limited Partnership,
dated as of May 12, 2000.
TABLE OF CONTENTS
Section Page
ARTICLE 1 DEFINITIONS................................................1
Section 1.1 Definitions..........................................1
ARTICLE 2 RIGHT OF FIRST OFFER FOR OPERATING PROPERTIES..............6
Section 2.1 Pre-Offer............................................6
Section 2.2 Offer................................................7
Section 2.3 Certain Restrictions................................10
Section 2.4 Loss of the Common Fund's ROFO for
Operating Properties................................10
Section 2.5 Excluded Transactions...............................12
ARTICLE 3 RIGHT OF FIRST OFFER FOR DEVELOPMENT PROPERTIES...........12
Section 3.1 Offer...............................................12
Section 3.2 Certain Restrictions................................15
ARTICLE 4 GENERAL PROVISIONS APPLICABLE TO THE RIGHTS OF
FIRST OFFER...............................................16
Section 4.1 Permitted Changes...................................16
Section 4.2 Reporting Requirements..............................17
Section 4.3 Superior Rights.....................................17
Section 4.4 Good Faith..........................................17
Section 4.5 Financing...........................................18
Section 4.6 Remedies............................................18
Section 4.7 Additional Termination Right........................20
Section 4.8 Property Management Agreements;
Development Agreements..............................20
ARTICLE 5 GUARANTY..................................................21
Section 5.1 Boston Properties Guaranty..........................21
Section 5.2 Common Fund Guaranty................................22
Section 5.3 General Provisions..................................22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES............................24
(i)
Section 6.1 Boston Properties...................................24
Section 6.2 The Common Fund.....................................27
ARTICLE 7 RESTRICTIONS RELATING TO QUALIFIED ORGANIZATIONS..........28
Section 7.2 Definitions.........................................28
Section 7.2 Representation and Warranty.........................31
Section 7.3 Restriction.........................................31
Section 7.4 Sale of Promote Interests...........................31
Section 7.5 Additional Remedies.................................35
Section 7.6 Dispute Resolution Mechanism........................37
Section 7.7 Good Faith..........................................38
ARTICLE 8 MISCELLANEOUS.............................................38
Section 8.1 Notices.............................................40
Section 8.2 No Assignment.......................................40
Section 8.3 Entire Agreement....................................40
Section 8.4 Counterparts........................................40
Section 8.5 Modification; Waiver................................40
Section 8.6 Attorney's Fees.....................................40
Section 8.7 Severability; Construction..........................40
Section 8.8 Captions; Usage of Words of Reference;
Relationship of the Parties.........................41
Section 8.9 No Third Party Beneficiaries........................41
Section 8.10 Governing Law......................................41
Section 8.11 Confidentiality....................................41
Section 8.12 Successors.........................................42
Section 8.13 Non-Imputation Proceeds............................42
Section 8.14 Further Assurances.................................42
(ii)
MASTER AGREEMENT
This agreement (this "Agreement"), dated as of the 12th day of May,
2000, by and between COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE
COMMON RETIREMENT FUND (the "Common Fund"), having an address at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and BOSTON PROPERTIES LIMITED PARTNERSHIP
("Boston Properties"), a Delaware limited partnership, having an address at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, the Common Fund and Boston Properties desire to set forth
their agreement with respect to the acquisition from time to time by entities
owned by the Common Fund and Boston Properties of certain types of real
property; and
WHEREAS, Boston Properties has agreed to grant the Common Fund
certain rights of first offer with respect to such acquisitions and certain
other transactions.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Boston Properties and the Common
Fund hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"Acquisition Cost" shall mean, with respect to any Development
Property Interest, the sum of the following amounts as of any given date (the
"Determination Date"): (i) an amount equal to all of the third party
out-of-pocket sums actually paid by Boston Properties (or the applicable Boston
Properties Subsidiary, as the case may be) in connection with the acquisition by
Boston Properties (or such Boston Properties Subsidiary) of such Development
Property Interest, plus (ii) an amount equal to all of the third party
out-of-pocket sums actually paid by Boston Properties (or the applicable Boston
Properties Subsidiary, as the case may be), as of the Determination Date, in
connection with the ownership of such Development Property Interest from and
after such acquisition, plus (iii) an amount equal to the simple interest that
would have accrued on the amounts described in the preceding clauses (i) and
(ii), from the date that such amounts were paid by Boston Properties (or such
Boston Properties Subsidiary) through the Determination Date, at the rate of 8%
per annum.
"Advisor" shall mean the person or entity (if any) that, at the time
in question, is advising the Common Fund in connection with the transactions
contemplated
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by this Agreement. As of the date hereof, ▇.▇. ▇▇▇▇▇▇ Investment Management,
Inc. is the Advisor.
"Boston Properties Guaranty Party" shall mean (i) any Boston
Properties Subsidiary, (ii) any so-called "preferred stock" subsidiary of Boston
Properties, (iii) such other subsidiary as to which Boston Properties is
entitled to no less than 95% of the economics of such subsidiary, and (iv) any
permitted assignee of any of the foregoing entities under any Venture Agreement
(whether the applicable assignment was effected after all consents required
under such Venture Agreement were obtained by the assignor or such assignment
was permitted to be effected under the terms of such Venture Agreement without
the assignor obtaining any consents). Any entity described in any of the
preceding clauses (i), (ii) and (iii) shall be referred to herein as a "BP
Subsidiary Party".
"Boston Properties Subsidiary" shall mean any entity that (directly
or indirectly) (i) is wholly-owned by Boston Properties or (ii) is wholly-owned
by Boston Properties and Boston Properties, Inc. (sometimes referred to herein
as "BP Inc.").
"Business Day" or "business day" shall mean any day except
Saturdays, Sundays and the following days: New Year's Day, President's Day,
Memorial Day, Independence Day, Labor Day, Columbus Day, Thanksgiving, the day
following Thanksgiving, Christmas and any other day that shall be observed by
the New York State government as a legal holiday.
"BXP Development Property" shall mean any Development Property in
which Boston Properties or any Boston Properties Subsidiary holds a Development
Property Interest that was acquired by Boston Properties or such Boston
Properties Subsidiary more than 180 days prior to the date in question.
"Common Fund Guaranty Party" shall mean (i) any Common Fund
Subsidiary, and (ii) any permitted assignee of the Common Fund or any Common
Fund Subsidiary under any Venture Agreement (whether the applicable assignment
was effected after all consents required under such Venture Agreement were
obtained by the assignor or such assignment was permitted to be effected under
the terms of such Venture Agreement without the assignor obtaining any
consents).
"Common Fund Subsidiary" shall mean any entity that (directly or
indirectly) is wholly-owned by the Common Fund. However, the parties agree that
CRF Met Square, LLC shall constitute a Common Fund Subsidiary (notwithstanding
the fact that CRF Met Square, LLC is not wholly-owned by the Common Fund).
"Common Fund's Surviving Obligations" shall mean any obligations
imposed on the Common Fund pursuant to (i) the second-to-last sentence of
Section 2.1(a) below, (ii) Section 2.3(b) below, or (iii) Section 3.2(b) below.
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"Development Property" shall mean any real property located anywhere
in the Target Markets that, at the time in question, either (i) consists
primarily of unimproved land or (ii) consists of land that contains improvements
which (x) are substantially vacant and (y) require Major Work in order to be
able to be used primarily for office and related uses generally.
"Development Property Interest" shall mean any of the following
interests in a Development Property: (i) fee title to such Development Property,
(ii) the lessee's interest in a lease for such Development Property, (iii) any
other interest that gives a person or entity 100% ownership (directly or
indirectly) of such Development Property, or (iv) all the ownership interests in
one or more entities that (directly or indirectly) hold 100% of any of the
interests described in the preceding clauses (i), (ii) and (iii).
"Excluded Information" shall mean, with respect to any Operating
Property Interest, any information that (i) was generated by or for the then
seller of such Operating Property Interest, (ii) was obtained by Boston
Properties solely because of the particular nature of its relationship with such
seller, and (iii) is not generally available to other potential purchasers of
such Operating Property Interest.
"Existing Venture Entities" shall mean (i) BP ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
LLC (the "140 ▇▇▇▇▇▇▇▇ Street Entity"), a Delaware limited liability company and
(ii) The Metropolitan Square Associates LLC, a District of Columbia limited
liability company
"Existing Venture Entity Operating Agreements" shall mean (i) that
certain Limited Liability Company Agreement of ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC, dated
as of the date hereof, between the Common Fund and Boston Properties (the "140
▇▇▇▇▇▇▇▇ Street Operating Agreement"), and (ii) that certain Limited Liability
Company Agreement of The Metropolitan Square Associates LLC, dated as of the
date hereof, between Boston Properties and CRF Met Square, LLC.
"Institutional Development Transaction" shall mean any transaction
or proposed transaction with respect to a Development Property pursuant to which
either (a) Boston Properties (or a Boston Properties Subsidiary) and an
Institutional Partner will jointly acquire a Development Property Interest in a
Development Property or (b) an Institutional Partner otherwise agrees to
contribute capital for any direct or indirect legal or beneficial interest in
(including, without limitation, any right to share in the profits and/or
appreciation in value of) a Development Property in which Boston Properties (or
any Boston Properties Subsidiary) holds, or intends to acquire, a Development
Property Interest. By way of example only (and without limiting the foregoing),
an Institutional Development Transaction would include a mortgage with an
"equity kicker" or similar component. However, a legal or beneficial interest in
Boston Properties or Boston Properties, Inc. shall not, in and of itself,
constitute an "indirect" legal or beneficial interest in a Development Property
for purposes of this definition. Notwithstanding the foregoing, the transactions
described on Schedule VIII annexed hereto shall not constitute Institutional
Development Transactions.
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"Institutional Partner" shall mean any of the following types of
entities (or any entity that is directly or indirectly owned or controlled by
any of the following types of entities), whether domestic or foreign: (a) a
commercial bank, trust company (whether acting individually or in a fiduciary
capacity for another entity that constitutes an Institutional Partner), savings
and loan association, savings bank, financing company or similar institution;
(b) an insurance company; (c) an investment bank; (d) an employee's welfare,
benefit, profit-sharing, pension or retirement trust, fund or system (whether
federal, state, municipal, private or otherwise); (e) a religious, educational
or eleemosynary institution or foundation; (f) a governmental agency; (g) a
credit union, trust or endowment fund; (h) a hedge fund, opportunity fund or
similar type of fund; (i) an entity not referred to in the foregoing provisions
of this definition that is subject to supervision and regulation by the
insurance or banking department of any of the United States, the Board of
Governors of the Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation or by any successor hereafter exercising similar functions; or (j)
any combination of one or more of the foregoing entities. Notwithstanding the
foregoing, no entity that satisfies any of the foregoing criteria but of which
Boston Properties owns at least 90% of the voting interests, owns at least 90%
of the equity interests, and otherwise solely controls all aspects of the
management shall constitute an Institutional Partner. Boston Properties
represents and warrants to the Common Fund that, as of the date hereof, no such
entity exists.
"Major Operating Property Interest" shall mean any Operating
Property Interest that, at the time in question, is being offered for sale
(whether by bid or otherwise) for a gross purchase price that is reasonably
anticipated to exceed Two Hundred Million ($200,000,000) Dollars.
"Major Work" shall mean any of the following types of work: (i) the
installation or replacement of all or substantially all of the elevator,
electrical, plumbing, HVAC and other major systems of the building in question,
or (ii) the installation or replacement of all or substantially all of a
building's facade.
"New BXP Development Property" shall mean any Development Property
in which Boston Properties or any Boston Properties Subsidiary holds a
Development Property Interest that was acquired by Boston Properties or such
Boston Properties Subsidiary within 180 days prior to the date in question.
"Offer Term" shall mean the period commencing on the date of this
Agreement and ending on the sooner to occur of (i) the third anniversary of such
date and (ii) the first date on which the Common Fund (x) has invested at least
$270,000,000 of initial capital to acquire Venture Properties in accordance with
the terms of this Agreement and (y) has no approval from the Common Fund's Real
Estate Advisory Committee (the "REAC") to continue investing with Boston
Properties in Operating Properties or Development Properties under the terms of
this Agreement.
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"Operating Property" shall mean any real property located anywhere
in Target Markets that, at the time in question, (i) is used or is intended to
be used primarily for office and related purposes and (ii) is not a Development
Property.
"Operating Property Interest" shall mean any of the following
interests in an Operating Property: (i) fee title to such Operating Property,
(ii) the lessee's interest in a lease for such Operating Property, (iii) any
other interest that gives a person or entity 100% ownership (directly or
indirectly) of such Operating Property, or (iv) all the ownership interests in
one or more entities that (directly or indirectly) hold 100% of any of the
interests described in the preceding clauses (i), (ii) and (iii).
"Opportunity Fund" shall mean (a) any real estate opportunity fund,
real estate hedge fund or similar fund (i) in which the Common Fund holds any
direct or indirect interest and (ii) with respect to which the Common Fund
generally has no right to consent to the acquisition of any real property by
such real estate opportunity fund, real estate hedge fund or similar fund, and
(b) any entity that is directly or indirectly owned or controlled by any such
real estate opportunity fund, real estate hedge fund or similar fund.
"Target Markets" shall mean the areas of the United States described
in Schedule VI annexed hereto.
"Venture Agreements" shall mean, collectively, all of the following
agreements (as such agreements may be amended or modified from time to time):
(i) this Agreement; (ii) all of the Venture Entity Operating Agreements; (iii)
all of the agreements to which any Venture Entity is a party or by which any
Venture Entity is bound (including, without limitation, all property management
agreements, leasing agency agreements, development agreements and similar
agreements); and (iv) any other agreements that are executed pursuant to this
Agreement.
"Venture Entities" shall mean, collectively, (i) the Existing
Venture Entities; (ii) any entity that is created by or on behalf of Boston
Properties and the Common Fund pursuant to the provisions of Sections 2.2(c) or
3.1(c) of this Agreement; (iii) any entity (x) that Boston Properties and the
Common Fund (in their sole discretion) mutually agree to create other than in
accordance with such Sections 2.2(c) and 3.1(c), and (y) that is wholly-owned
(whether directly or indirectly) by Boston Properties and the Common Fund; and
(iv) any Boston Properties Subsidiary into which the Common Fund (or a Common
Fund Subsidiary) is admitted pursuant to Section 3.1(c) below.
"Venture Entity Operating Agreements" shall mean, collectively, all
of the following agreements (as such agreements may be amended or modified from
time to time): (i) the Existing Venture Entity Operating Agreements; (ii) any
operating or similar agreement that is entered into pursuant to the provisions
of Sections 2.2(c) or 3.1(c) of this Agreement; and (iii) any operating or
similar agreement that relates to any entity described in clause (iii) of the
definition of "Venture Entities."
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"Venture Property Interest" shall mean (i) each Development Property
Interest that is held by a Venture Entity and (ii) each Operating Property
Interest that is held by a Venture Entity.
ARTICLE 2
RIGHT OF FIRST OFFER FOR OPERATING PROPERTIES
Section 2.1. Pre-Offer. (a) Subject to Section 2.5 and Section 4.3 below,
if at any time during the Offer Term either Boston Properties or any Boston
Properties Subsidiary (i) intends to submit an offer to acquire any Operating
Property Interest or (ii) otherwise intends to acquire any Operating Property
Interest, then Boston Properties, prior to submitting an offer, or commencing
material negotiations, to acquire (or permitting any Boston Properties
Subsidiary to submit an offer, or commence material negotiations, to acquire)
such Operating Property Interest, shall give the Common Fund and the Advisor
notice to that effect (each such notice, a "Pre-Offer Notice"). Each Pre-Offer
Notice shall be accompanied by all information (other than any Excluded
Information) with respect to the applicable Operating Property Interest that (x)
was generated by or for the seller thereof and (y) is then in the possession of,
or is otherwise reasonably available to, Boston Properties (provided, however,
that if and to the extent that such information does not include all of the
information set forth on Schedule VII annexed hereto with respect to such
Operating Property Interest, then such Pre-Offer Notice shall also include all
the information set forth on Schedule VII annexed hereto with respect to such
Operating Property Interest, which information shall be set forth on the form
that is annexed hereto as Schedule VII). If the Common Fund, in its sole
discretion, desires to pursue the acquisition of such Operating Property
Interest with Boston Properties (or the applicable Boston Properties Subsidiary,
as the case may be), then the Common Fund, on or before the date (the "Pre-Offer
Outside Response Date") that is 5 business days after the Common Fund's receipt
of a properly given Pre-Offer Notice with respect to such Operating Property
Interest, shall give Boston Properties notice to that effect (each such notice,
a "Pre-Offer Acceptance Notice"). Boston Properties acknowledges and agrees
that, until Boston Properties is notified to the contrary by the Common Fund,
the Advisor shall be entitled to give any Pre-Offer Acceptance Notice on behalf
of the Common Fund, and any Pre-Offer Acceptance Notice so given shall be of the
same force and effect as if the Common Fund had given such Pre-Offer Acceptance
Notice itself. If the Common Fund gives Boston Properties a Pre-Offer Acceptance
Notice with respect to any Operating Property Interest, then the Common Fund may
not pursue the acquisition of such Operating Property Interest with any person
or entity other than Boston Properties (or the applicable Boston Properties
Subsidiary) for a period of one year following the date that the Common Fund
gave such Pre-Offer Acceptance Notice (it being agreed, however, that if Boston
Properties is still diligently pursuing the acquisition of such Operating
Property Interest at the end of such one-year period, then such one-year period
shall be extended for so long as Boston Properties is so diligently pursuing
such acquisition); provided, however, that (notwithstanding the foregoing) if at
any time Boston Properties fails to comply with all of its obligations
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under this Article 2 with respect to such Operating Property Interest, then
(from and after such failure) the restriction contained in this sentence shall
no longer apply. Notwithstanding anything to the contrary contained herein, the
Common Fund shall not be deemed to have breached its obligations contained in
the preceding sentence with respect to any applicable Operating Property
Interest by reason of any Opportunity Fund, during the applicable time period
referred to in such sentence, pursuing the acquisition of such Operating
Property Interest.
(b) If (i) Boston Properties complies with all of its obligations
under this Section 2.1 with respect to any Operating Property Interest and (ii)
the Common Fund fails to give Boston Properties a Pre-Offer Acceptance Notice
with respect to such Operating Property Interest by the Pre-Offer Outside
Response Date applicable thereto, then either Boston Properties or a Boston
Properties Subsidiary may acquire such Operating Property Interest without any
further obligation to the Common Fund under this Article 2 with respect to such
Operating Property Interest.
Section 2.2. Offer. (a) If the Common Fund timely gives Boston Properties
a Pre-Offer Acceptance Notice with respect to any Operating Property Interest,
then Boston Properties, as soon as is reasonably practicable after Boston
Properties' receipt of such Pre-Offer Acceptance Notice, shall give the Common
Fund an additional notice with respect to such Operating Property Interest (each
such additional notice, an "Offer Notice"). Each Offer Notice shall (i) set
forth the economic and other material terms on which the applicable Operating
Property Interest is available for acquisition, (ii) set forth the price that
Boston Properties (or such Boston Properties Subsidiary) desires to offer
(whether by bid or otherwise) for such Operating Property Interest, as well as
all of the other material terms that Boston Properties (or such Boston
Properties Subsidiary) desires to include in such offer, (iii) constitute an
offer to the Common Fund to pursue the joint acquisition of such Operating
Property Interest with Boston Properties using the structure set forth and
described in Section 2.2(c) below, (iv) contain a reasonably detailed estimate
of all the Due Diligence Costs (as defined below) that Boston Properties expects
to incur in connection with the acquisition of such Operating Property Interest
(which estimate shall set forth any such Due Diligence Costs theretofore
actually incurred), and (v) contain all other information that is reasonably
necessary for the Common Fund to evaluate whether to accept such offer (which
information shall include, without limitation, the information set forth on
Schedule I annexed hereto with respect to the Operating Property to which such
Operating Property Interest pertains).
(b) If the Common Fund, in its sole discretion, desires to accept
such an offer with respect to any Operating Property Interest, then the Common
Fund, on or before the Outside Response Date (as defined below) applicable to
such Operating Property Interest, shall give Boston Properties notice to that
effect (each such notice, an "Offer Acceptance Notice"); provided, however, that
if such offer pertains to a Major Operating Property Interest, then the Common
Fund shall have the right to state in such notice that the acceptance of such
offer is conditioned on the Common Fund obtaining the REAC's approval of such
acceptance (in which case such notice shall, for purposes of this Article 2,
constitute a "Conditional Offer Acceptance Notice", not an Offer
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Acceptance Notice). If (i) the Common Fund gives Boston Properties a Conditional
Offer Acceptance Notice with respect to any Major Operating Property Interest,
and (ii) the Common Fund, prior to receiving a Rescission Notice (as defined
below) from Boston Properties with respect to such Major Operating Property
Interest in accordance with the immediately following sentence, gives Boston
Properties an additional notice (a "REAC Approval Notice") stating that the REAC
has approved the joint acquisition of such Major Operating Property Interest
with Boston Properties in accordance with this Agreement, then, for all purposes
of this Agreement (including Section 2.2(c) below), the giving of such REAC
Approval Notice shall constitute, and have the same force and effect as, a
timely given Offer Acceptance Notice with respect to such Major Operating
Property Interest. If (i) the Common Fund gives Boston Properties a Conditional
Offer Acceptance Notice with respect to any Major Operating Property Interest,
and (ii) the Common Fund fails to give Boston Properties a REAC Approval Notice
within 10 business days after Boston Properties' receipt of such Conditional
Offer Acceptance Notice, then Boston Properties, prior to receiving a REAC
Approval Notice from the Common Fund with respect to such Major Operating
Property Interest, shall have the right to give the Common Fund a notice (a
"Rescission Notice") rescinding the offer contained in the Offer Notice that
pertains such Major Operating Property Interest, whereupon either Boston
Properties or a Boston Properties Subsidiary may acquire such Major Operating
Property Interest without any further obligation to the Common Fund under this
Article 2 with respect to such Operating Property Interest. For purposes of this
Article 2, the term "Outside Response Date" shall mean, with respect to any
Operating Property Interest, the date that is 10 business days after the Common
Fund receives a properly given Offer Notice with respect to such Operating
Property Interest.
(c) If the Common Fund timely gives Boston Properties an Offer
Acceptance Notice with respect to any Operating Property Interest, then (i)
Boston Properties and the Common Fund shall pursue the joint acquisition of such
Operating Property Interest, and (ii) until such time (if ever) as the parties
shall execute (or cause to be executed) an operating agreement with respect to
such Operating Property Interest in accordance with the immediately following
sentence, each of such parties shall, in connection with the pursuit of such
joint acquisition, deal with the other as if Boston Properties and the Common
Fund were parties to an operating agreement in the form of Exhibit A annexed
hereto with respect to such Operating Property Interest (it being agreed that,
without limiting the foregoing, the Common Fund shall have all of the consent
rights contained in Section 7.02 of such form of operating agreement in
connection with the pursuit of such joint acquisition). If Boston Properties and
the Common Fund are the winning bidder with respect to such Operating Property
Interest, or if the seller thereof is otherwise willing to sell such Operating
Property Interest to Boston Properties and the Common Fund on terms that are
acceptable to Boston Properties and the Common Fund, as the case may be, then
(i) Boston Properties shall promptly create a Delaware limited liability company
for purposes of acquiring and holding such Operating Property Interest, of which
limited liability company Boston Properties (or, at Boston Properties' election,
an entity wholly-owned and controlled by Boston Properties) and the Common Fund
(or, at the Common Fund's election, an entity wholly-owned and controlled by the
Common Fund) shall be the sole members, and (ii)
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immediately after such limited liability company is created, the Common Fund
(or, at the Common Fund's election, any entity that is wholly-owned and
controlled by the Common Fund) and Boston Properties (or, at Boston Properties'
election, any entity that is wholly-owned and controlled by Boston Properties)
shall execute and deliver (or cause to be executed and delivered) an operating
agreement for such limited liability company substantially in the form of
Exhibit A annexed hereto, subject, however, to Section 4.1 below.
(d) If the Common Fund timely gives Boston Properties an Offer
Acceptance Notice with respect to any Operating Property Interest, then the
Common Fund, within 30 days after its receipt of a reasonably detailed invoice
therefor (together with such corroborating documentation as the Common Fund may
reasonably request), shall pay to Boston Properties sixty-five percent (65%) of
the Due Diligence Costs incurred by Boston Properties in connection with such
Operating Property Interest; provided, however, that (notwithstanding the
foregoing) (x) the Common Fund shall not be required to pay or reimburse Boston
Properties for any portion of the Due Diligence Costs incurred by Boston
Properties in connection with such Operating Property Interest to the extent
that such Due Diligence Costs exceed $10,000 in the aggregate, unless and to the
extent that the Common Fund gives its approval to Boston Properties to incur
such Due Diligence Costs (which approval shall not be unreasonably withheld);
(y) upon the execution of a Venture Entity Operating Agreement with respect to
such Operating Property Interest, such Venture Entity Operating Agreement shall
govern the payment and/or reimbursement of any Due Diligence Costs incurred with
respect to such Operating Property Interest from and after such execution, and
the Common Fund shall have no further obligation under this paragraph (d) to pay
or reimburse Boston Properties for any such Due Diligence Costs so incurred; and
(z) if (i) the Common Fund and Boston Properties for any reason fail to jointly
acquire such Operating Property Interest (whether directly or indirectly) in
accordance with this Article 2, and (ii) Boston Properties, within a period of 1
year thereafter, acquires such Operating Property Interest (whether directly or
indirectly) itself or with any person or entity, then Boston Properties shall
reimburse the Common Fund for any Due Diligence Costs paid or reimbursed to
Boston Properties by the Common Fund with respect to such Operating Property
Interest. For purposes hereof, the term "Due Diligence Costs" means all of the
reasonable and customary out- of-pocket costs and expenses paid or incurred by
Boston Properties to unaffiliated third parties on account of any due diligence
performed in connection with the acquisition (or attempted acquisition) by
Boston Properties and the Common Fund, in accordance with Section 2.2 hereof, of
any Operating Property Interest.
(e) If (i) Boston Properties complies with all of its obligations
under this Section 2.2 with respect to any Operating Property Interest and (ii)
the Common Fund fails to give Boston Properties an Offer Acceptance Notice or a
Conditional Offer Acceptance Notice with respect to such Operating Property
Interest by the Outside Response Date applicable thereto, then either Boston
Properties or a Boston Properties Subsidiary may acquire such Operating Property
Interest without any further obligation to the Common Fund under this Article 2
with respect to such Operating Property Interest.
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Section 2.3. Certain Restrictions. (a) Notwithstanding anything to the
contrary contained herein, if (i) the Common Fund timely gives Boston Properties
an Offer Acceptance Notice with respect to any Operating Property Interest (or
the Common Fund and Boston Properties otherwise agree to acquire such Operating
Property Interest jointly) and (ii) the Venture Entity created pursuant to
Section 2.2(c) above fails to acquire such Operating Property Interest because
of any act or omission of Boston Properties or a Boston Properties Subsidiary,
including, without limitation, any refusal to consent to such acquisition by
Boston Properties (or a Boston Properties Subsidiary) under the applicable
Venture Entity Operating Agreement, or Boston Properties and the Common Fund
otherwise fail to acquire such Operating Property Interest jointly because of
any such act or omission, then (x) from and after the date of such act or
omission, the restriction contained in the second-to-last sentence of Section
2.1(a) with respect to such Operating Property Interest shall no longer be
applicable to the Common Fund and (y) in no event may Boston Properties acquire
(whether directly or indirectly) such Operating Property Interest (or any
portion thereof) for a period of one year following such act or omission (it
being agreed, however, that if the Common Fund is still diligently pursuing the
acquisition of such Operating Property Interest at the end of such one-year
period, then such one-year period shall be extended for so long as the Common
Fund is diligently pursuing such acquisition).
(b) Notwithstanding anything to the contrary contained herein, if
(i) the Common Fund timely gives Boston Properties an Offer Acceptance Notice
with respect to any Operating Property Interest (or the Common Fund and Boston
Properties otherwise agree to acquire such Operating Property Interest jointly)
and (ii) the Venture Entity created pursuant to Section 2.2(c) above fails to
acquire such Operating Property Interest because of any act or omission of the
Common Fund or a Common Fund Subsidiary, including, without limitation, any
refusal to consent to such acquisition by the Common Fund (or a Common Fund
Subsidiary) under the applicable Venture Entity Operating Agreement, or Boston
Properties and the Common Fund otherwise fail to acquire such Operating Property
Interest jointly because of any such act or omission, then in no event may the
Common Fund acquire (whether directly or indirectly) such Operating Property
Interest (or any portion thereof) for a period of one year following such act or
omission (it being agreed, however, that if Boston Properties is still
diligently pursuing the acquisition of such Operating Property Interest at the
end of such one-year period, then such one-year period shall be extended for so
long as Boston Properties is diligently pursuing such acquisition).
Notwithstanding anything to the contrary contained herein, the Common Fund shall
not be deemed to have breached its obligations contained in the preceding
sentence with respect to any applicable Operating Property Interest by reason of
any Opportunity Fund, during the applicable time period referred to in such
sentence, acquiring such Operating Property Interest.
Section 2.4. Loss of the Common Fund's ROFO for Operating Properties (a)
If (i) within any Measurement Period (as defined below), Boston Properties
properly gives the Common Fund separate Pre-Offer Notices with respect to at
least 8 Operating Property Interests, and (ii) the Common Fund fails to give a
Pre-Offer Acceptance Notice
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with respect to at least 50% of the Operating Property Interests in respect of
which the Common Fund, during such Measurement Period, receives separate
duly-given Pre-Offer Notices, then Boston Properties shall have the right, by
notice (each, an "Inquiry Notice") given to the Common Fund within 15 business
days thereafter, to request that the Common Fund certify to Boston Properties
whether or not at least 50% of the Operating Property Interests in respect of
which the Common Fund received separate duly-given Pre-Offer Notices during such
Measurement Period constitute Qualified Rejected OP Interests (as defined
below). Each Inquiry Notice shall (1) state in capital letters that such notice
constitutes an Inquiry Notice under this Section 2.4(a), (2) specify the
Measurement Period in respect of which it is being given, (3) list all of the
Operating Property Interests for which Boston Properties properly gave the
Common Fund Pre-Offer Notices during such Measurement Period and (4) state
whether or not the Common Fund gave Boston Properties a Pre-Offer Acceptance
Notice in respect of each of such Operating Property Interests. If the Common
Fund receives a properly given Inquiry Notice on account of any Measurement
Period, then the Common Fund, within 15 business days after its receipt of such
Inquiry Notice, shall certify to Boston Properties whether or not at least 50%
of the Operating Property Interests in respect of which the Common Fund received
separate duly-given Pre-Offer Notices during such Measurement Period constitute
Qualified Rejected OP Interests. If, in response to any properly given Inquiry
Notice, the Common Fund certifies to Boston Properties that at least 50% of the
Operating Property Interests in respect of which the Common Fund received
separate duly-given Pre-Offer Notices during the applicable Measurement Period
constitute Qualified Rejected OP Interests, then Boston Properties shall have
the right, within 30 days after its receipt of such certification, to terminate
the provisions of this Article 2 (but no other provisions of this Agreement) by
giving written notice of such termination to the Common Fund. If Boston
Properties properly gives such written notice of termination to the Common Fund,
then (except for the Common Fund's Surviving Obligations contained in this
Article 2) both parties shall be relieved of any obligations or liabilities that
accrue under this Article 2 from and after the date such termination notice is
so given. For purposes hereof, (I) the term "Measurement Period" means any
consecutive 12-month period that occurs during the Offer Term; and (II) the term
"Qualified Rejected OP Interest" shall mean an Operating Property Interest in
respect of which the Common Fund (x) receives a properly given Pre-Offer Notice,
and (y) fails to give a Pre-Offer Acceptance Notice because the Common Fund, as
of the Pre-Offer Outside Response Date for such Operating Property Interest, was
already having material discussions about pursuing, or was already pursuing, the
joint acquisition of such Operating Property Interest with an entity other than
Boston Properties or a Boston Properties Subsidiary. Notwithstanding the
foregoing, for purposes of the definition of "Qualified Rejected OP Interest,"
the Common Fund shall not be deemed to be having material discussions about
pursuing, or actually pursuing, the acquisition of any Operating Property
Interest by reason of any Opportunity Fund taking any such actions.
(b) If (i) within any Measurement Period, Boston Properties properly
gives the Common Fund separate Offer Notices with respect to at least 8
Operating Property Interests that constitute Qualified Operating Property
Interests (as defined below), and (ii) the Common Fund fails to give an Offer
Acceptance Notice with respect
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to at least 50% of the Qualified Operating Property Interests in respect of
which the Common Fund, during such Measurement Period, receives separate
duly-given Offer Notices, then Boston Properties may terminate the provisions of
this Article 2 (but no other provisions of this Agreement) by giving written
notice of such termination to the Common Fund. If Boston Properties properly
gives such written notice of termination to the Common Fund, then (except for
the Common Fund's Surviving Obligations contained in this Article 2) both
parties shall be relieved of any obligations or liabilities that accrue under
this Article 2 from and after the date such termination notice is so given. For
purposes hereof, a "Qualified Operating Property Interest" shall mean an
Operating Property Interest with respect to which all of the criteria set forth
on Schedule II annexed to this Agreement are fulfilled both (i) on the date on
which the Common Fund receives an Offer Notice with respect to such Operating
Property Interest and (ii) on the Outside Response Date applicable to such
Operating Property Interest.
Section 2.5. Excluded Transactions. The provisions of this Article 2 shall
not apply to the transactions described on Schedule IX annexed hereto.
ARTICLE 3
RIGHT OF FIRST OFFER FOR
DEVELOPMENT PROPERTIES
Section 3.1. Offer. (a) Subject to Section 4.3 below, if at any time
during the Offer Term either Boston Properties or any Boston Properties
Subsidiary intends to enter into an Institutional Development Transaction with
respect to any Development Property, then Boston Properties, prior to engaging a
broker, finder or other third party for purposes of seeking, or commencing
negotiations with, any Institutional Partner in connection therewith (or
permitting any Boston Properties Subsidiary to seek, or commence negotiations
with, any Institutional Partner in connection therewith), shall give the Common
Fund notice to that effect (each such notice, a "Development Property Offer
Notice"). Each Development Property Offer Notice shall (i) describe in
reasonable detail the manner in which Boston Properties (or the applicable
Boston Properties Subsidiary) proposes to develop or refurbish the Development
Property that is the subject of such Institutional Development Transaction, (ii)
either (x) if (as of the date Boston Properties gives such Development Property
Offer Notice) such Development Property is a BXP Development Property, set forth
Boston Properties' good faith determination ("Boston Properties' FMV
Determination") of the fair market value (as of such date) of the Development
Property Interest held by Boston Properties (or the applicable Boston Properties
Subsidiary) in such Development Property, (y) if (as of the date Boston
Properties gives such Development Property Offer Notice) such Development
Property is a New BXP Development Property, set forth in reasonable detail the
Acquisition Cost (as of such date) for the Development Property Interest held by
Boston Properties (or the applicable Boston Properties Subsidiary) in such
Development Property (and be accompanied by such corroborating documentation as
shall be reasonably necessary to
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establish such Acquisition Cost), or (z) in all other cases, set forth the price
at which the Development Property Interest that is the subject of such
Institutional Development Transaction is available for acquisition, and (iii)
contain all other information that is reasonably necessary for the Common Fund
to evaluate whether to accept such offer (which information shall include,
without limitation, (x) the information set forth on Schedule III annexed hereto
with respect to such Development Property and (y) Boston Properties' good faith
estimate of the costs to develop or refurbish such Development Property in the
manner described in such Development Property Offer Notice, which estimate shall
be in the form and shall contain the information set forth and described on
Schedule IV annexed hereto). Further, each Development Property Offer Notice
shall constitute an offer to the Common Fund to acquire an interest in the
corresponding Development Property using the structure described in Section
3.1(c) below, which offer shall be at a price that is based on the Agreed Value
(as defined below) of the applicable Development Property Interest in such
Development Property. For purposes hereof, the "Agreed Value" of any Development
Property Interest shall mean (as the case may be): (i) if such Development
Property Interest was acquired by Boston Properties (or the applicable Boston
Properties Subsidiary, as the case may be) more than 180 days prior to the date
on which Boston Properties gives the Development Property Offer Notice
pertaining thereto, an amount equal to Boston Properties' FMV Determination of
such Development Property Interest, (ii) if such Development Property Interest
was acquired by Boston Properties (or the applicable Boston Properties
Subsidiary, as the case may be) within 180 days prior to the date on which
Boston Properties gives the Development Property Offer Notice pertaining
thereto, an amount equal to the Acquisition Cost of such Development Property
Interest as of the date that the applicable Venture Entity acquires such
Development Property Interest (or as of the date on which the Common Fund or a
Common Fund Subsidiary is admitted into the Boston Properties Subsidiary that is
the holder of such Development Property Interest, as the case may be), or (iii)
in all other cases, an amount equal to the price at which such Development
Property Interest is ultimately acquired by the applicable Venture Entity.
(b) If the Common Fund, in its sole discretion, desires to accept
any offer pursuant to Section 3.1(a) with respect to any Development Property,
then the Common Fund, on or before the DP Outside Response Date (as defined
below) applicable to such Development Property, shall give Boston Properties
notice to that effect (each such notice, a "Development Property Acceptance
Notice"). For purposes of this Article 3, the term "DP Outside Response Date"
shall mean, with respect to any Development Property, the date that is 30
business days after the Common Fund receives a properly given Development
Property Offer Notice that pertains to such Development Property.
(c) If the Common Fund gives Boston Properties a Development
Property Acceptance Notice with respect to any Development Property by the
applicable DP Outside Response Date, then (i) within 15 days after Boston
Properties receives such Development Property Acceptance Notice, Boston
Properties shall create a Delaware limited liability company for purposes of
acquiring and holding the applicable Development Property Interest in such
Development Property, of which limited liability
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company Boston Properties (or, at Boston Properties' election, an entity
wholly-owned and controlled by Boston Properties) and the Common Fund (or, at
the Common Fund's election, an entity wholly-owned and controlled by the Common
Fund) shall be the sole members, and (ii) immediately after such limited
liability company is created, Boston Properties (or, at Boston Properties'
election, an entity wholly-owned and controlled by Boston Properties) and the
Common Fund (or, at the Common Fund's election, an entity wholly-owned and
controlled by the Common Fund) shall execute (or cause to be executed) an
operating agreement for such limited liability company substantially in the form
of Exhibit B annexed hereto, subject, however, to Section 4.1 below. If, on the
date on which any Venture Entity is created pursuant to the first sentence of
this paragraph, either Boston Properties or any Boston Properties Subsidiary
holds any Development Property Interests in the applicable Development Property,
then, promptly after such Venture Entity is so created, (i) Boston Properties
shall convey or otherwise transfer (or, as the case may be, cause the applicable
Boston Properties Subsidiary to convey or otherwise transfer) to such Venture
Entity all the Development Property Interests held by Boston Properties (or held
by the applicable Boston Properties Subsidiary) in such Development Property for
the Agreed Value of such Development Property Interests, and (ii) simultaneously
with the execution of the operating agreement for such Venture Entity, Boston
Properties (or, as the case may be, the applicable Boston Properties
Subsidiary), the Common Fund (or, as the case may be, the applicable Common Fund
Subsidiary) and such Venture Entity shall enter into a contribution agreement
substantially in the form annexed hereto as Exhibit C with respect to the Common
Fund's admission into such Venture Entity (the "Contribution Agreement Form")
(with the initial capital contribution of the Common Fund (or such Common Fund
Subsidiary) being calculated based on such Agreed Value). Notwithstanding the
foregoing, if, as of the date on which the Common Fund gives a Development
Property Acceptance Notice with respect to any Development Property, (i) a
Boston Properties Subsidiary holds the applicable Development Property Interest
in such Development Property, and (ii) such Boston Properties Subsidiary has
held such interest for less than 90 days, then Boston Properties may elect, in
lieu of creating a new Venture Entity to hold such Development Property Interest
in accordance with the first sentence of this subsection, to have the Common
Fund (or, at the Common Fund's election, a Common Fund Subsidiary) be admitted
into such Boston Properties Subsidiary. If Boston Properties makes such an
election, then (x) Boston Properties, the Common Fund (or, as the case may be,
the applicable Common Fund Subsidiary) and such Boston Properties Subsidiary
shall enter into a contribution agreement in substantially the form annexed
hereto as Exhibit C with respect to the Common Fund's admission into such Boston
Properties Subsidiary (with the initial capital contribution of the Common Fund
(or such Common Fund Subsidiary) being calculated based on the Agreed Value of
such Development Property Interest), (y) simultaneously with the execution of
such contribution agreement, Boston Properties and the Common Fund (or such
Common Fund Subsidiary) shall execute (or cause to be executed) an operating
agreement for such Boston Properties Subsidiary in the form of Exhibit B annexed
hereto, subject, however, to Section 4.1 below and (z) upon such execution, such
Boston Properties Subsidiary shall constitute a Venture Entity for all purposes
of this Agreement. The parties acknowledge that the Contribution Agreement Form
contains certain provisions that may not be applicable to all transactions (as
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indicated in the Contribution Agreement Form), and the parties, in executing
each contribution agreement in accordance with the provisions of this Section
3.1(c), shall act reasonably and in good faith to delete all such provisions
that are not applicable to the transaction in question. The parties also
acknowledge that the Contribution Agreement Form contains certain blank spaces
for certain terms that must be added thereto, and the parties, in executing each
such contribution agreement, shall act reasonably and in good faith to cause
such information to be added thereto. If the Common Fund timely gives Boston
Properties a Development Property Acceptance Notice with respect to any
Development Property Interest, then until such time as the parties shall execute
(or cause to be executed) an operating agreement with respect to such
Development Property Interest in accordance with the foregoing provisions of
this Section 3.1(c), each of such parties shall, in connection with such
Development Property Interest, deal with the other as if Boston Properties and
the Common Fund were parties to an operating agreement in the form of Exhibit B
annexed hereto with respect to such Development Property Interest (it being
agreed that, without limiting the foregoing, the Common Fund shall have all of
the consent rights contained in Section 7.02 of such form of operating agreement
in connection therewith).
(d) If (i) Boston Properties complies with all of its obligations
under this Section 3.1 with respect to any Development Property and (ii) the
Common Fund fails to give Boston Properties a Development Property Acceptance
Notice with respect to such Development Property by the DP Outside Response Date
applicable thereto, then either Boston Properties or a Boston Properties
Subsidiary may enter into any Institutional Development Transaction with respect
to such Development Property.
Section 3.2. Certain Restrictions. (a) Notwithstanding anything to the
contrary contained herein, if (i) the Common Fund timely gives Boston Properties
a Development Property Acceptance Notice with respect to any Development
Property (or Boston Properties otherwise agrees to permit the Common Fund to
acquire an interest in such Development Property) and (ii) the Venture Entity
created pursuant to Section 3.1(c) above fails to acquire the applicable
interests in such Development Property because of any act or omission of Boston
Properties or a Boston Properties Subsidiary, including, without limitation, any
refusal to consent to such acquisition by Boston Properties (or a Boston
Properties Subsidiary) under the applicable Venture Entity Operating Agreement,
or the Common Fund otherwise fails to acquire an interest in such Development
Property because of any such act or omission, then in no event may Boston
Properties enter into (or permit any Boston Properties Subsidiary to enter into)
any Institutional Development Transaction with respect to such Development
Property for a period of one year following such act or omission.
(b) Notwithstanding anything to the contrary contained herein, if
(i) the Common Fund timely gives Boston Properties a Development Property
Acceptance Notice with respect to any Development Property (or Boston Properties
otherwise agrees to permit the Common Fund to acquire an interest in such
Development Property) and (ii) the Venture Entity created pursuant to Section
3.1(c) above fails to acquire the applicable interests in such Development
Property because of any act or
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omission of the Common Fund or a Common Fund Subsidiary, including, without
limitation, any refusal to consent to such acquisition by the Common Fund (or a
Common Fund Subsidiary) under the applicable Venture Entity Operating Agreement,
or such Venture Entity otherwise fails to acquire an interest in such
Development Property because of any such act or omission, then in no event may
the Common Fund acquire (or permit any Common Fund Subsidiary to acquire) any
direct or indirect ownership interest in such Development Property for a period
of one year following such act or omission (it being agreed, however, that (x)
if, at the time the Common Fund gave such Development Property Acceptance
Notice, Boston Properties did not (directly or indirectly) own the applicable
interest in such Development Property, and (y) Boston Properties is still
diligently pursuing the acquisition of such interest at the end of such one-year
period, then such one-year period shall be extended for so long as Boston
Properties is so diligently pursuing such acquisition). Notwithstanding anything
to the contrary contained herein, the Common Fund shall not be deemed to have
breached its obligations contained in the preceding sentence with respect to any
applicable Development Property by reason of any Opportunity Fund, during the
applicable period referred to in such sentence, acquiring any direct or indirect
ownership interest in such Development Property.
ARTICLE 4
GENERAL PROVISIONS APPLICABLE
TO THE RIGHTS OF FIRST OFFER
Section 4.1. Permitted Changes. The parties acknowledge that each
Operating Agreement Form (as defined below) contains certain provisions that may
not be applicable to all transactions (as indicated in each such Operating
Agreement Form), and the parties, in executing each operating agreement in
accordance with the provisions of Articles 2 and 3 above, shall act reasonably
and in good faith to delete all such provisions that are not applicable to the
transaction in question. The parties also acknowledge that each Operating
Agreement Form contains certain blank spaces for certain terms that must be
added thereto, and the parties, in executing each such operating agreement,
shall act reasonably and in good faith to cause such information to be added
thereto. Further, the parties, in executing each such operating agreement, shall
act reasonably and in good faith to make such changes to the applicable
Operating Agreement Form (a) as are necessary to effect the transaction in
question in the most mutually cost-effective and efficient manner and (b) as are
otherwise necessary in connection with the particular nature of such transaction
(in either such case, without affecting the rights or obligations of each party
that are set forth in the applicable Operating Agreement Form). Finally, the
parties agree that in certain instances a limited liability company might not be
the appropriate entity in which to hold an Operating Property Interest or a
Development Property Interest to be acquired pursuant to Article 2 or Article 3
above; accordingly, the parties agree that, in such instances, the parties will
act reasonably and in good faith in order to select a different form of entity
to hold such Operating Property Interest or Development Property Interest (as
the case may be), without limiting the rights or obligations of either party
under this Agreement with respect to such Operating Property
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Interest or Development Property Interest (as the case may be). Boston
Properties and the Common Fund agree that, in executing an operating agreement
with respect to any Development Property Interest pursuant to Section 3.1(c)
above, the Common Fund may elect whether or not to include in such operating
agreement the provisions described in Schedule IV of Exhibit B annexed hereto.
Moreover, the Common Fund, in connection with any Venture Entity Operating
Agreement that is executed with respect to a Development Property Interest, may
elect at any time to unilaterally amend such Venture Entity Operating Agreement
to include in such Venture Entity Operating Agreement the provisions described
in Schedule IV of Exhibit B annexed hereto. For purposes hereof, the term
"Operating Agreement Form" means either (i) the form of operating agreement
annexed to this Agreement as Exhibit A or (ii) the form of operating agreement
annexed to this Agreement as Exhibit B (or, as the context requires, each of
such forms).
Section 4.2. Reporting Requirements. Boston Properties, within 30 days
after its receipt of a request therefor from the Common Fund, shall furnish to
the Common Fund such information as is reasonably requested by the Common Fund
to determine whether Boston Properties has complied with Boston Properties'
obligations under Articles 2 and 3 above (which information shall include,
without limitation, a reasonably detailed list of all real property interests
directly or indirectly acquired by Boston Properties (and/or any Boston
Properties Subsidiary) since the date of the last such request by the Common
Fund (or, in the case of the first such request, since the date of this
Agreement)). Notwithstanding the foregoing, Boston Properties shall not be
required to deliver such information to the Common Fund more than 4 times in any
12 month period.
Section 4.3. Superior Rights. All of the Common Fund's rights under
Article 2 and Article 3 above shall be subject to the rights and options
(collectively, the "Superior Rights") that are described on, and that are held
by the applicable entities described on, Schedule V attached hereto. Boston
Properties represents and warrants to the Common Fund that, as of the date
hereof, except as and to the extent set forth on Schedule V annexed hereto, (a)
all the Superior Rights are in full force and effect, (b) Boston Properties is
bound by all the Superior Rights, and (c) Boston Properties does not have the
right to terminate (or cause to be terminated) any of the Superior Rights
without the payment of a material sum of money or the incurrence of material
liability by Boston Properties or any Boston Properties Subsidiary.
Section 4.4. Good Faith. Boston Properties agrees that, in connection with
the discharge of its obligations under Articles 2 and 3 above, Boston Properties
shall act in good faith. In amplification and not in limitation of the preceding
sentence, Boston Properties shall not take any actions that in any way
circumvent (or that are intended in any way to circumvent) any of Boston
Properties' obligations, or any of the Common Fund's rights, under either
Article 2 or Article 3 above. By way of example only (and without limiting the
foregoing), Boston Properties shall be deemed to have breached its obligations
under this Section 4.4 if Boston Properties, for non-economic reasons, creates
an entity that is not wholly-owned by Boston Properties to acquire an Operating
Property Interest (and Boston Properties thereby avoids its obligations under
Article 2). The
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Common Fund agrees that, in connection with the discharge of its obligations
under Articles 2 and 3 above, the Common Fund shall act in good faith. In
amplification and not in limitation of the preceding sentence, the Common Fund
shall not take any actions that in any way circumvent (or that are intended in
any way to circumvent) any of the Common Fund's obligations, or any of Boston
Properties' rights, under either Article 2 or Article 3 above.
Section 4.5. Financing. (a) Because the Common Fund (or the applicable
Common Fund Subsidiary) will have the right to participate in and consent to any
financing decisions relating to any Operating Property or Development Property
in which the Common Fund acquires an interest pursuant to Article 2 or Article 3
above, the parties agree as follows: (I) Boston Properties will not obtain or
commit to obtain (or permit any Boston Properties Subsidiary to obtain or commit
to obtain) any financing with respect to any Operating Property Interest that
Boston Properties (or any Boston Properties Subsidiary) intends to acquire
during the Offer Term unless and until either (x) the Common Fund gives an Offer
Acceptance Notice with respect to such Operating Property Interest (whereupon
the Common Fund will have the right to participate in and consent to any
decision relating to such financing in accordance with Section 2.2(c) above and
the applicable Venture Entity Operating Agreement), (y) the Common Fund, after
receiving a properly given Pre-Offer Notice with respect to such Operating
Property Interest, fails to give a Pre-Offer Acceptance Notice with respect to
such Operating Property Interest by the Pre-Offer Outside Response Date
applicable thereto, or (z) the Common Fund, after receiving a properly given
Offer Notice with respect to such Operating Property Interest, fails to give an
Offer Acceptance Notice with respect to such Operating Property Interest by the
Outside Response Date applicable thereto; and (II) Boston Properties will not
obtain or commit to obtain (or permit any Boston Properties Subsidiary to obtain
or commit to obtain) any financing for a Development Property with respect to
which Boston Properties (or any Boston Properties Subsidiary) intends to enter
into an Institutional Development Transaction during the Offer Term unless and
until either (x) the Common Fund gives a Development Property Acceptance Notice
with respect to such Development Property (whereupon the Common Fund will have
the right to participate in and consent to any decision relating to such
financing in accordance with Section 3.1(c) above and the applicable Venture
Entity Operating Agreement) or (y) the Common Fund, after receiving a properly
given Development Property Offer Notice with respect to such Development
Property, fails to give a Development Property Acceptance Notice with respect to
such Development Property by the DP Outside Response Date applicable thereto.
(b) Boston Properties and the Common Fund acknowledge that it is
their intention that the total debt encumbering all the stabilized Venture
Properties at the end of the Offer Term will not exceed 60% of the total value
of all such Venture Properties at such time.
Section 4.6. Remedies. (a) If Boston Properties materially breaches any of
its non-monetary obligations under Article 2 or Article 3 above, then the Common
Fund (as the Common Fund's sole and exclusive remedy on account of such breach)
shall be
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entitled, within 45 days after the Common Fund learns of such breach, to
exercise (or cause to be exercised) the Reverse Buy-Sell Rights (as defined
below) contained in the Venture Entity Operating Agreements with respect all
(but not less than all) of the then existing Venture Properties. In the case of
all other breaches by Boston Properties of Boston Properties' obligations under
Article 2 or Article 3 above, the Common Fund shall be entitled to pursue all
remedies available to the Common Fund on account thereof at law or in equity.
For purposes hereof, the term "Reverse Buy-Sell Rights" shall mean either (i)
the rights described in Section 13.04 of each Operating Agreement Form or (ii)
any rights contained in any Venture Entity Operating Agreement that are
substantially similar to the rights contained in such Section 13.04.
(b) If the Common Fund materially breaches any of its non-monetary
obligations under Article 2 or Article 3 above, then Boston Properties (as
Boston Properties' sole and exclusive remedy on account of such breach) shall be
entitled, within 45 days after Boston Properties learns of such breach, to
terminate the provisions of Articles 2 and 3 of the Agreement (but no other
provisions of this Agreement). In the case of all other breaches by the Common
Fund of the Common Fund's obligations under Article 2 or Article 3 above, Boston
Properties shall be entitled to pursue all remedies available to Boston
Properties on account thereof at law or in equity. If Boston Properties, in
accordance with the first sentence of this paragraph (b), properly elects to
terminate the provisions of such Articles 2 and 3, then (except for the Common
Fund's Surviving Obligations) both parties shall be relieved of any obligations
or liabilities that accrue under such Articles 2 and 3 from and after the
effective date of such termination. The Common Fund's Surviving Obligations
shall survive any termination of Articles 2 and 3 of this Agreement by Boston
Properties pursuant to this Section 4.6(b) or any termination of such Article 2
by Boston Properties pursuant to Section 2.4 above; provided that if, after such
termination, the Common Fund in bad faith breaches any of the Common Fund's
Surviving Obligations, then, subject to the further provisions of this Section
4.6(b) below, Boston Properties, as its sole and exclusive remedy on account of
such breach, may pursue one (and only one) of the following remedies (the
"Applicable Remedies") (with the Common Fund, in accordance with the following
provisions of this Section 4.6(b), electing in its sole discretion which one of
such remedies Boston Properties may pursue): (i) the exercise of the BP Reverse
Buy Sell Rights (as defined below) with respect all (but not less than all) of
the then existing Venture Properties, or (ii) the prosecution of an action for
the actual damages (other than consequential damages) suffered by Boston
Properties on account of such breach (the remedy referenced in this clause (ii),
the "Damages Remedy"). If Boston Properties believes that, after any such
termination of this Article 2 by Boston Properties, the Common Fund in bad faith
has breached any of the Common Fund's Surviving Obligations, then, within 45
days after Boston Properties learns of such breach, Boston Properties may send
the Common Fund a reasonably detailed notice of such alleged breach. If, in
accordance with the preceding sentence, the Common Fund receives a notice from
Boston Properties alleging any such breach by the Common Fund, then the Common
Fund, within 45 days after it receives such notice, shall have the right (a) to
acknowledge that such breach occurred, in which case the Common Fund shall elect
one of the Applicable Remedies for Boston Properties to pursue on account of
such breach (whereupon Boston Properties
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shall have the right to pursue such Applicable Remedy (and no other remedy) on
account of such breach); or (b) to (i) deny that such breach occurred and (ii)
notify Boston Properties as to which one of the two Applicable Remedies Boston
Properties may pursue if a court of law ultimately determines that such breach
did occur, in which case Boston Properties shall have the right to bring an
action to determine (x) whether or not such a breach occurred and (y) if the
Common Fund so elects for Boston Properties to pursue the Damages Remedy, what
damages, if any, the Common Fund is liable for as a result of such breach. If
(i) Boston Properties brings such an action and (ii) it is determined in such
action that the Common Fund in bad faith breached any of the Common Fund's
Surviving Obligations after the termination of this Article 2 by Boston
Properties in accordance herewith, then Boston Properties may, on account of
such breach, pursue the Applicable Remedy selected by the Common Fund in
accordance with the preceding sentence (and no other remedy). For purposes
hereof, the term "BP Reverse Buy-Sell Rights" shall mean either (i) the rights
described in Section 13.06 of the Operating Agreement Form annexed hereto as
Exhibit A, (ii) the rights described in Section 13.06 of the Operating Agreement
Form annexed hereto as Exhibit B or (iii) any rights contained in any Venture
Entity Operating Agreement that are substantially similar to the foregoing
rights.
Section 4.7. Additional Termination Right. If the Common Fund exercises
its Buy-Sell Rights (as defined below) with respect to any Venture Property
Interest, then Boston Properties shall have the right, within 45 days after such
exercise, to terminate the provisions of Articles 2 and 3 of the Agreement (but
no other provisions of this Agreement). If Boston Properties, in accordance with
the preceding sentence, properly elects to terminate the provisions of such
Articles 2 and 3, then both parties shall be relieved of any obligations or
liabilities that accrue under such Articles 2 and 3 from and after the effective
date of such termination. For purposes hereof, the term "Buy-Sell Rights" shall
mean either (i) the rights described in Article XIII of each Operating Agreement
Form or (ii) any rights contained in any Venture Entity Operating Agreement that
are substantially similar to the rights contained in such Article XIII.
Section 4.8. Property Management Agreements; Development Agreements. (a)
Simultaneously with the acquisition of an Operating Property Interest by a
Venture Entity during the Offer Term, Boston Properties, with respect to such
Operating Property Interest, shall enter into (or, at Boston Properties'
election, cause a BP Subsidiary Party to enter into) a property management
agreement with such Venture Entity in the form annexed hereto as Exhibit D
(subject, however, to Section 4.8(d) below).
(b) Within 60 days after either (i) any Venture Entity acquires a
Development Property Interest during the Offer Term, or (ii) the Common Fund (or
a Common Fund Subsidiary) is admitted during the Offer Term into any Boston
Properties Subsidiary that holds a Development Property Interest, Boston
Properties, with respect to such Development Property Interest, shall enter into
(or, at Boston Properties' election, cause a BP Subsidiary Party to enter into)
a property management agreement with such Venture Entity (or with such Boston
Properties Subsidiary that holds such Development
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Property Interest, as the case may be) in the form annexed hereto as Exhibit D
(subject, however, to Section 4.8(d) below).
(c) Within 60 days after either (i) any Venture Entity acquires a
Development Property Interest during the Offer Term, or (ii) the Common Fund is
admitted during the Offer Term into any Boston Properties Subsidiary that holds
a Development Property Interest, Boston Properties, with respect to such
Development Property Interest, shall enter into (or, at Boston Properties'
election, cause a BP Subsidiary Party to enter into) a development and services
agreement with such Venture Entity (or with such Boston Properties Subsidiary
that holds such Development Property Interest, as the case may be) in the form
annexed hereto as Exhibit E (subject, however, to Section 4.8(d) below).
(d) Boston Properties acknowledges that each form described in this
Section 4.8 contains certain provisions that may not be applicable to all
transactions (as indicated in each such form), and Boston Properties, in
executing (or causing to be executed) each agreement in accordance with the
provisions of this Section 4.8, shall act reasonably and in good faith in
negotiating to delete all such provisions that are not applicable to the
transaction in question. Boston Properties also acknowledges that each such form
contains certain blank spaces for certain terms that must be added thereto, and
Boston Properties, in executing (or causing to be executed) each such agreement,
shall act reasonably and in good faith in negotiating what information should be
added to such blank spaces.
ARTICLE 5
GUARANTY
Section 5.1. Boston Properties Guaranty. Boston Properties, as primary
obligor and not as surety merely, hereby unconditionally guarantees to the
Common Fund the punctual payment and performance by each Boston Properties
Guaranty Party of all of the obligations of such Boston Properties Guaranty
Party under each of the Venture Agreements to which such Boston Properties
Guaranty Party is now or hereafter becomes a party or otherwise bound
(including, without limitation, the agreements described on Schedule X annexed
hereto). The guaranty contained in the preceding sentence (the "Boston
Properties Guaranty") shall be self-operative with respect to any Venture
Agreement that is entered into after the date hereof by any Boston Properties
Guaranty Party (or with respect to any Venture Agreement by which any Boston
Properties Guaranty Party otherwise hereafter becomes bound), and no further
instrument of guaranty shall be required in order for the Boston Properties
Guaranty to apply to any such Venture Agreement. However, if requested by the
Common Fund, Boston Properties shall execute, acknowledge and deliver to the
Common Fund an instrument (in form and substance reasonably satisfactory to the
Common Fund) confirming that the Boston Properties Guaranty applies to any such
Venture Agreement. Boston Properties hereby acknowledges and agrees that each of
the following entities is an intended third-party beneficiary of the Boston
Properties Guaranty: (i) each Venture Entity that is a
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party to (or is otherwise entitled to the benefits of) any Venture Agreement
with a Boston Properties Guaranty Party (including, without limitation, any
Venture Entity that is a party to any Management Agreement, Leasing Agency
Agreement or Development Agreement with a Boston Properties Guaranty Party) and
(ii) any Common Fund Guaranty Party that holds a direct or indirect interest in
any Venture Entity. Without limiting the generality of the foregoing, Boston
Properties shall cause each Boston Properties Guaranty Party that is a party to
(or is otherwise bound by) any Venture Agreement to comply with all of the
obligations of such Boston Properties Guaranty Party under such Venture
Agreement.
Section 5.2. Common Fund Guaranty. The Common Fund, as primary obligor and
not as surety merely, hereby unconditionally guarantees to Boston Properties the
punctual payment and performance by each Common Fund Guaranty Party of all of
the obligations of such Common Fund Guaranty Party under each of the Venture
Agreements to which such Common Fund Guaranty Party is now or hereafter becomes
a party or otherwise bound (including, without limitation, the agreements
described on Schedule XI annexed hereto). The guaranty contained in the
preceding sentence (the "Common Fund Guaranty") shall be self-operative with
respect to any Venture Agreement that is entered into after the date hereof by
any Common Fund Guaranty Party (or with respect to any Venture Agreement by
which any Common Fund Guaranty Party otherwise hereafter becomes bound), and no
further instrument of guaranty shall be required in order for the Common Fund
Guaranty to apply to any such Venture Agreement. However, if requested by Boston
Properties, the Common Fund shall execute, acknowledge and deliver to Boston
Properties an instrument (in form and substance reasonably satisfactory to
Boston Properties) confirming that the Common Fund Guaranty applies to any such
Venture Agreement. The Common Fund hereby acknowledges and agrees that each of
the following entities is an intended third-party beneficiary of the Common Fund
Guaranty: (i) any Boston Properties Guaranty Party that holds a direct or
indirect interest in any Venture Entity in which a Common Fund Guaranty Party
also holds a direct or indirect interest and (ii) any Venture Entity in which a
Common Fund Guaranty Party holds a direct interest. Without limiting the
generality of the foregoing, the Common Fund shall cause each Common Fund
Guaranty Party that is a party to (or is otherwise bound by) any Venture
Agreement to comply with all of the obligations of such Common Fund Guaranty
Party under such Venture Agreement.
Section 5.3. General Provisions.
(a) The following provisions of this Section 5.3 shall apply
separately to each of the Boston Properties Guaranty and the Common Fund
Guaranty. For purposes of the application of such provisions to the Boston
Properties Guaranty, the following terms shall have the following meanings: (i)
"Guaranty" shall mean the Boston Properties Guaranty; (ii) "Guarantor" shall
mean Boston Properties; (iii) "Beneficiary" shall mean the Common Fund (together
with all intended third-party beneficiaries of the Boston Properties Guaranty);
(iv) "Guaranteed Obligations" shall mean all of the obligations guaranteed by
the Boston Properties Guaranty; and (v) "Obligor" shall mean each Boston
Properties Guaranty Party whose obligations are being guaranteed by the
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Boston Properties Guaranty. For purposes of the application of such provisions
to the Common Fund Guaranty, the following terms shall have the following
meanings: (i) "Guaranty" shall mean the Common Fund Guaranty; (ii) "Guarantor"
shall mean the Common Fund; (iii) "Beneficiary" shall mean Boston Properties
(together with all intended third-party beneficiaries of the Common Fund
Guaranty); (iv) "Guaranteed Obligations" shall mean all of the obligations
guaranteed by the Common Fund Guaranty; and (v) "Obligor" shall mean each Common
Fund Guaranty Party whose obligations are being guaranteed by the Common Fund
Guaranty.
(b) The Guaranty is and is intended to be a continuing guaranty of
the payment and performance of the Guaranteed Obligations, independent of and in
addition to any other guaranty, endorsement, collateral or other agreement held
by the applicable Beneficiary thereof or with respect thereto, whether or not
furnished by the Guarantor under such Guaranty. The Guaranty is absolute and
unconditional and shall not be changed or affected by any representation, oral
agreement, act or thing whatsoever, except as herein provided. Further, the
Guaranty is unlimited in amount.
(c) Guarantor hereby consents and agrees that each Beneficiary may
at any time and from time to time, in its discretion, without affecting
Guarantor or releasing Guarantor from any of its obligations under this Article
5, take any of the following actions without notice, demand or any reservation
of rights: (1) renew, extend, increase, accelerate or otherwise change the time
for payment or performance of, or the manner, place or terms of payment or
performance of, any of the Guaranteed Obligations or (2) amend, modify, renew,
extend, terminate or cancel any of the Venture Agreements to which any of the
Guaranteed Obligations relate. Nothing in this paragraph (c) shall be construed
to give any Beneficiary the unilateral right to amend or modify any Venture
Agreement to which it is a party (or by which it is otherwise bound).
(d) Guarantor hereby agrees to pay and perform the Guaranteed
Obligations in full: (1) without reduction by reason of any setoff, defense or
counterclaim of any Obligor; (2) without requiring presentment, protest or
notice of non-payment or notice of default to the Guarantor, to any Obligor or
to any other person or entity; (3) without demand for payment by the applicable
Obligor or Guarantor or proof of such demand; (4) without requiring the
applicable Beneficiary to resort first to the applicable Obligor (this being a
guaranty of payment and not of collection merely) or to any other guaranty or
endorsement or any collateral which the applicable Beneficiary may hold; (5)
without requiring notice of acceptance hereof or assent hereto; and (6) without
requiring notice that any of the Guaranteed Obligations have been incurred or of
the reliance by the applicable Beneficiary upon the Guaranty; and Guarantor
hereby waives all of the foregoing.
(e) None of Guarantor's obligations under this Article 5 shall be
affected by any of the following, all of which Guarantor hereby waives: (i) any
defense arising by reason of the cessation or termination from any cause
whatsoever of liability of the applicable Obligor with respect to all or any of
the Guaranteed Obligations including, without limitation, any failure,
negligence or omission by the applicable Beneficiary in
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enforcing its claims against the applicable Obligor; (ii) any release,
settlement, waiver or compromise of the applicable Obligor's obligation to pay
or perform any of the Guaranteed Obligations; (iii) any release, non-perfection
or invalidity of any direct or indirect security or guaranty held by the
applicable Beneficiary for any of the Guaranteed Obligations; (iv) a
cancellation or termination of any of the Venture Agreements; (v) the invalidity
or unenforceability of any of the Guaranteed Obligations; (vi) any suretyship
defenses and defenses in the nature thereof; or (vii) any other act or omission
or other thing which might, but for the provisions of this paragraph, constitute
a legal or equitable discharge of Guarantor's obligations under this Article 5.
(f) Guarantor agrees to pay on demand all costs and expenses of
every kind incurred by each Beneficiary in enforcing the Guaranty, including,
without limitation, the actual attorney's fees incurred by such Beneficiary in
retaining counsel for advice, suit, appeal, any insolvency or other proceedings
under the Federal Bankruptcy Code or otherwise.
(g) The Guaranty shall continue and be effective notwithstanding
any bankruptcy, insolvency or other similar or dissimilar proceeding relating to
any Obligor and notwithstanding any failure by or inability of any Beneficiary
to enforce any of the Guaranteed Obligations against any Obligor because of or
any prohibition of such enforcement arising out of such proceeding. Whenever any
of the Guaranteed Obligations could be declared due by any Beneficiary from the
applicable Obligor were it not for such proceeding, such Beneficiary may declare
the same to be due from Guarantor notwithstanding such proceeding.
(h) The applicable Beneficiary may remedy any default by any
Obligor or with respect to any Guaranteed Obligations in any manner without
waiving the default remedied and without waiving any other prior or subsequent
default by any Obligor. All rights and remedies of each Beneficiary under this
Article 5 are cumulative.
(i) Guarantor hereby waives all rights of subrogation, indemnity,
contribution, exoneration, reimbursement or other claim which Guarantor now has,
or may hereafter have, against any Obligor in connection with the Guaranteed
Obligations.
(j) The provisions of this Article 5 shall survive the expiration or
termination of this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Section 6.1. Boston Properties. Boston Properties hereby represents and
warrants to the Common Fund that, as of the date hereof:
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6.1.1 Boston Properties is a Delaware limited partnership,
duly organized, validly existing and in good standing under the laws of
the State of Delaware.
6.1.2 Boston Properties has duly authorized, executed and
delivered this Agreement, and this Agreement and all of the obligations of
Boston Properties hereunder constitute legal, valid and binding
obligations of Boston Properties enforceable against Boston Properties in
accordance with their terms. Boston Properties has the requisite
partnership power and authority to execute this Agreement and to enter
into the transactions contemplated hereby. Boston Properties has caused
this Agreement to be executed by a duly authorized partner of Boston
Properties. Neither the execution of this Agreement nor the consummation
or performance by Boston Properties of the transactions contemplated by
this Agreement will result in any of the following (to the extent that any
of the following would adversely affect Boston Properties' ability to
perform its obligations under this Agreement): (I) a violation of, or a
conflict with, or a default (or an event which, with notice and/or lapse
of time, would constitute a default) under any of the terms or provisions
of (a) any agreement or instrument to which Boston Properties (or any
Boston Properties Subsidiary) is a party to or by which Boston Properties
(or any Boston Properties Subsidiary) is bound, (b) the limited
partnership agreement or the other organizational documents of Boston
Properties, or (c) any applicable legal requirements, or (II) the creation
of any lien, security interest, charge or encumbrance upon any properties
that are directly or indirectly owned by Boston Properties or any Boston
Properties Subsidiary.
6.1.3 Boston Properties is not required to do any of the
following (to the extent that the failure to do any of the following would
adversely affect Boston Properties' ability to perform its obligations
under this Agreement): obtain any consent, approval, order or
authorization from, or make any declaration or filing with, any person or
any governmental authority, in connection with the execution and delivery
of this Agreement or the performance and consummation of the transactions
contemplated hereby.
6.1.4 BP Inc. is a Delaware corporation, duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
6.1.5 BP Inc. is the sole general partner of Boston Properties
and owns approximately 66% of the limited partnership interests in Boston
Properties.
6.1.6 BP Inc. has timely filed all required forms, reports and
documents (the "BP Reports") required to be filed by BP Inc. under the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Laws") with the Securities and Exchange
Commission (the "SEC"). As of their respective dates, the BP Reports (i)
complied in all material respects with the
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applicable requirements of the Securities Laws and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of BP Inc. included in
or incorporated by reference into the BP Reports (including the related
notes and schedules) fairly presents in all material respects the
consolidated financial position of BP Inc. and its subsidiaries as of its
date and each of the consolidated statements of income, retained earnings
and cash flows of BP Inc. included in or incorporated by reference into
the BP Reports (including any related notes and schedules) fairly presents
in all material respects the results of operations, retained earnings or
cash flows, as the case may be, of BP Inc. and its subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments which would not be material in amount
or effect), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may
be noted therein and except, in the case of the unaudited statements, as
permitted by Form 10-Q or Form 8-K of the SEC.
6.1.7 There are (i) no continuing orders, injunctions or
decrees of any governmental entity to which BP Inc. or any subsidiary of
BP Inc. is a party or by which any of their respective properties or
assets are bound, and (ii) no actions, suits or proceedings pending (of
which service or notice of process has been received by an employee of BP
Inc.) against BP Inc. or any subsidiary of BP Inc. or, to the actual
knowledge of BP Inc., threatened against BP Inc. or any subsidiary of BP
Inc., at law or in equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality, that, if decided
adversely, could, individually or in the aggregate, have a material
adverse effect on the business, results of operations, financial condition
or prospects of BP Inc. and its subsidiaries, considered as a whole (a "BP
Material Adverse Effect").
6.1.8 Except as disclosed in the BP Reports filed with the SEC
prior to the date hereof, since December 31, 1999, BP Inc. and its
subsidiaries have conducted their business only in the ordinary course of
such business and there has not been any event or occurrence that would,
or is reasonably likely to, result in a BP Material Adverse Effect
6.1.9 Since June 24, 1997 through the most recent December
31st, BP Inc. has been subject to taxation as a real estate investment
trust (a "REIT") within the meaning of Section 856 of the Internal Revenue
Code of 1986, as amended (the "Code"), and has satisfied all requirements
to qualify as a REIT for such years and (ii) BP Inc. has operated and
intends to operate, in such a manner as to qualify as a REIT for the
taxable year ending December 31, 1999. BP Inc. has not taken any action or
failed to take any action which would reasonably be expected to, result in
a challenge to its status as a REIT for 2000, and to the knowledge of BP
Inc., no such challenge is pending or threatened.
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6.1.10 Sections 11.1, 11.3, 11.4, 11.5 and 11.6 of Boston
Properties' operating agreement contain all of the material provisions of
such operating agreement that relate to the right of BP Inc. to consent to
direct and indirect transfers of interests in Boston Properties by limited
partners thereof.
All of the foregoing representations and warranties shall be deemed
to have been re-made as of the date on which each Venture Entity Operating
Agreement is entered into (whether pursuant to this Agreement or otherwise).
Section 6.2 The Common Fund. The Common Fund hereby represents and
warrants to Boston Properties that, as of the date hereof:
6.2.1 The Common Fund has duly authorized, executed and
delivered this Agreement, and this Agreement and all of the obligations of
the Common Fund hereunder constitute legal, valid and binding obligations
of the Common Fund enforceable against the Common Fund in accordance with
their terms. The Common Fund has caused this Agreement to be executed by a
duly authorized representative of the Common Fund. Neither the execution
of this Agreement nor the consummation or performance by the Common Fund
of the transactions contemplated by this Agreement will result in any of
the following (to the extent that any following would adversely affect the
Common Fund's ability to perform its obligations under this Agreement): a
violation of, or a conflict with, or a default (or an event which, with
notice and/or lapse of time, would constitute a default) under any of the
terms or provisions of (a) any agreement or instrument to which the Common
Fund (or any Common Fund Subsidiary) is a party to or by which the Common
Fund (or any Common Fund Subsidiary) is bound, or (b) any applicable legal
requirements.
6.2.2 The Common Fund is not required to do any of the
following (to the extent that the failure to do any of the following would
adversely affect the Common Fund's ability to perform its obligations
under this Agreement): obtain any consent, approval, order or
authorization from, or make any declaration or filing with, any person or
any governmental authority, in connection with the execution and delivery
of this Agreement or the performance and consummation of the transactions
contemplated hereby.
[Remainder of Page Intentionally Left Blank]
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ARTICLE 7
RESTRICTIONS RELATING TO
QUALIFIED ORGANIZATIONS
Section 7.1 Definitions. For purposes of this Article 7, the following
terms shall have the following meanings:
"Acceptable Appraiser" shall mean any real estate appraiser who (a)
is a member of the American Institute of Real Estate Appraisers, or a successor
body exercising similar functions, (b) is a member of a national appraisal firm
that performs appraisals throughout the United States, (c) has at least ten (10)
years' experience as an appraiser of office properties, and (d) is unaffiliated
with either the Common Fund or Boston Properties.
"Boston Properties Party" shall mean Boston Properties, any
Qualified BP Transferee, any Qualified BP Subsidiary and any Successor of any of
the foregoing.
"Fair Market Value" shall mean, with respect to any Qualified
Venture Property Interest, the price, as of the date in question, at which a
willing seller would sell, and a willing buyer would buy, the applicable Venture
Entity's interest in such Qualified Venture Property Interest, assuming that (i)
neither the seller nor the purchaser is under any compulsion to act, and (ii)
both the seller and the buyer are acting prudently, with full knowledge and for
their self interest. The Fair Market Value of such Qualified Venture Property
Interest shall (subject to the proviso at the end of this sentence) be
determined by taking into consideration all relevant factors, including, without
limitation, both the physical condition and use, as of the applicable date, of
the underlying land and improvements (including, without limitation, all leases
and other encumbrances affecting such land and improvements as of such date);
provided, however, that (notwithstanding anything to the contrary contained
herein) the Fair Market Value of any Qualified Venture Property Interest in
unimproved land shall be calculated without regard to the highest use to which
such land could be put as of such applicable date, if such highest use is not
primarily office use.
"Percentage Interest" with respect to any Venture Entity, shall mean
the percentage interest held by each member (or analogous interest holder) in
such Venture Entity, as set forth in the Venture Entity Operating Agreement for
such Venture Entity. By way of example only, the Percentage Interest of each
member in the ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Venture Entity shall be the percentage set
forth opposite its name in the definition of "Percentage Interest" contained in
the ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating Agreement (subject to adjustment as provided
in the ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating Agreement).
"Prohibited Transaction" shall mean shall mean (i) the admission of
a party directly into any Boston Properties Party, (ii) the admission of a party
indirectly into any Boston Properties Party, (iii) the transfer of a direct or
indirect interest in any Boston Properties Party, or (iv) any other action by a
Boston Properties Party or the
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suffering by any Boston Properties Party of an action, in each case that has the
effect of causing any Qualified Venture Entity not to meet the requirements of
Section 514(c)(9)(E) of the Code (including, without limitation, by reason of
Section 514(c)(9)(D) of the Code) and the Treasury Regulations thereunder (or,
if applicable, any successor provisions of the Internal Revenue Code or Treasury
Regulations); provided, however, that no admission, transfer or other action
described in any of the preceding clauses (ii), (iii) and (iv) shall constitute
a Prohibited Transaction if, and to the extent that, such admission, transfer or
other action does not (under the partnership agreement, operating agreement or
other organizational documents of the applicable Boston Properties Party)
require the consent of the applicable Boston Properties Party (any such
admission, transfer or other action that meets the criteria in this proviso, an
"Uncontrollable QO Transaction"). Without limiting the generality of the
foregoing, and by way of example only, the following transaction is among the
transactions that do not constitute Prohibited Transactions: the transfer of an
interest in a Boston Properties Party to a Qualified Organization in such a way
that (i) such Qualified Organization has no direct or indirect interest in any
Qualified Promote Interest and (ii) no Qualified Venture Entity otherwise fails
to meet the requirements of Section 514(c)(9)(E) of the Code as a result of such
transfer.
"Promote Interest" shall mean, with respect to any Venture Entity,
the portion (if any) of the membership (or analogous) interest in such Venture
Entity that entitles the holder thereof to distributions and allocations in
excess of the product of (i) the Percentage Interest of the member (or analogous
interest holder) owning such interest and (ii) the total distributions and
allocations of such Venture Entity. The Promote Interest for any Venture Entity
shall include the difference (whether positive or negative) of (x) the capital
account balance of the holder of the Promote Interest and (y) the product of (A)
the Percentage Interest of the member (or analogous interest holder) owning such
interest and (B) the total aggregate capital account balances of such Venture
Entity.
"Promote Interest Purchase Price" shall mean, with respect to any
Promote Interest as of any date (the "Determination Date"), an amount equal to
the product of (a) 0.75, multiplied by (b) an amount (the "Promote Interest FMV
Price") equal to the net proceeds that, pursuant to the applicable Venture
Entity Operating Agreement, would be distributed to the holder of such Promote
Interest (as if such Promote Interest were the only interest in the applicable
Venture Entity held by such holder) if (i) the Qualified Venture Property
Interest then held by such Venture Entity was sold or otherwise disposed of (on
the Determination Date) for a price equal to the Fair Market Value (as of the
Determination Date) of such Qualified Venture Property Interest and (ii) the
proceeds of such sale or other disposition were first applied to pay (x) the
estimated costs and expenses that would be incurred by such Venture Entity in
connection with such a sale or other disposition to a bona fide third party and
(y) any debt of such Venture Property that is outstanding as of the
Determination Date.
"Qualified BP Subsidiary" shall mean any Boston Properties
Subsidiary (or any entity that, directly or indirectly, is wholly-owned by any
Successor to Boston
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Properties and/or Boston Properties, Inc.) that, at the time in question, is the
holder of any Promote Interest.
"Qualified BP Transferee" shall mean any transferee (whether direct
or remote) of Boston Properties' (or the applicable Boston Properties
Subsidiary's) interest in a Venture Entity, which transferee, at the time in
question, (x) is an affiliate of Boston Properties (or any Successor thereto)
and (y) is the holder of the Promote Interest in such Venture Entity.
"Qualified Organization" shall have the meaning ascribed to it in
Section 514(c)(9)(C) of the Internal Revenue Code of 1986, as amended (or, if
applicable, any successor provision of the Internal Revenue Code).
"Qualified Promote Interest" shall mean, at any time, any Promote
Interest that, at such time, is held by a Boston Properties Party.
"Qualified Venture Entity" shall mean, at any time, any Venture
Entity in which, at such time, any Boston Properties Party is the holder of the
Promote Interest (if any) in such Venture Entity.
"Qualified Venture Property Interest" shall mean, at any time, any
Venture Property Interest that is held by a Venture Entity which, at such time,
constitutes a Qualified Venture Entity.
"Restriction Period" shall mean the period of time commencing on the
date hereof and ending on the earlier to occur of (x) the later to occur of (1)
the last day of the Offer Term and (2) the first date on which the Common Fund
no longer has any direct or indirect interest in any Qualified Venture Entity
(the later to occur of such dates, the "Restriction Expiration Date") and (y)
the date on which the first Permitted Admission is effected in accordance with
Section 7.4 below; provided, however, that if, during any other period prior to
the Restriction Expiration Date, no direct or indirect partner of Boston
Properties (or any Successor of Boston Properties) shall constitute a Qualified
Organization (whether because the entity that was the subject of the last
Permitted Admission is no longer a partner of Boston Properties (or such
Successor) or otherwise), then the term "Restriction Period" shall also include
each such period that commences on the first date on which no direct or indirect
partner of Boston Properties (or such Successor of Boston Properties)
constitutes a Qualified Organization and ends on the earlier to occur of (x) the
Restriction Expiration Date and (y) the date on which the next Permitted
Admission is effected in accordance with Section 7.4 below.
"Successor" shall mean, with respect to any entity, any one of the
following: (i) an entity resulting from a merger, consolidation, reorganization
or recapitalization of or with such entity or (ii) a purchaser (or other
transferee) of all or substantially all of such entity's assets and all or
substantially all of such entity's liabilities.
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Section 7.2 Representation and Warranty. Boston Properties represents and
warrants to the Common Fund that, as of the date hereof, (a) Boston Properties
does not constitute (and no other Boston Properties Party constitutes) a
Qualified Organization, and (b) no direct or, to Boston Properties' knowledge,
indirect partner in Boston Properties (or any other Boston Properties Party)
constitutes a Qualified Organization such that a potential direct or indirect
allocation from any Qualified Venture Entity could cause such Qualified Venture
Entity not to meet the requirements of Section 514(c)(9)(E) of the Code
(including, without limitation, by reason of Section 514(c)(9)(D) of the Code)
and the Treasury Regulations thereunder (or, if applicable, any successor
provisions of the Internal Revenue Code or Treasury Regulations). Moreover, if
any Venture Entity Operating Agreement is entered into during any Restriction
Period, then Boston Properties shall be deemed to have represented and warranted
to the Common Fund (as of the date on which such Venture Entity Operating
Agreement is so entered into) that Section 7.3 below has not been violated
during such Restriction Period. Boston Properties shall promptly notify the
Common Fund if at any time Boston Properties learns that any direct or indirect
partner in Boston Properties (or any other Boston Properties Party) constitutes
a Qualified Organization such that a potential direct or indirect allocation
from any Qualified Venture Entity could cause such Qualified Venture Entity not
to meet the requirements of Section 514(c)(9)(E) of the Code (including, without
limitation, by reason of Section 514(c)(9)(D) of the Code) and the Treasury
Regulations thereunder (or, if applicable, any successor provisions of the
Internal Revenue Code or Treasury Regulations).
Section 7.3 Restriction. At no time during any Restriction Period shall
Boston Properties effect, or permit or suffer to be effected, any Prohibited
Transaction, except as and to the extent expressly permitted by Section 7.4
below. Without limiting the generality of the foregoing or anything in Section
7.4 below, in no event shall Boston Properties, prior to the first anniversary
of the date of this Agreement, admit into Boston Properties any direct partner
that constitutes a Qualified Organization, regardless of the type or amount of
consideration proposed to be paid in connection therewith (it being agreed,
however, that such an admission shall not be prohibited by this sentence if such
admission does not constitute a Prohibited Transaction, i.e., if such admission
would not cause any Qualified Venture Entity not to meet the requirements of
Section 514(c)(9)(E) of the Code (including, without limitation, by reason of
Section 514(c)(9)(D) of the Code) and the Treasury Regulations thereunder (or,
if applicable, any successor provisions of the Internal Revenue Code or Treasury
Regulations)).
Section 7.4 Sale of Promote Interests. (a) If (i) Boston Properties, at
any time after the first anniversary of the date of this Agreement but before
the end of any Restriction Period, desires to admit into Boston Properties any
direct partner that constitutes a Qualified Organization and such admission
would constitute a Prohibited Transaction, and (ii) the amount of the
consideration to be paid or contributed by such direct partner to or on account
of Boston Properties in connection with such admission is a least One Hundred
Million ($100,000,000) Dollars (any such admission described in the preceding
clauses (i) and (ii), a "Permitted Admission"), then Boston Properties shall be
permitted to effect such admission, provided that Boston Properties first
complies with
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all of the following provisions of this Section 7.4. Boston Properties shall
give the Common Fund prior notice (a "Promote Interest Offer Notice") of its
intention to effect a Permitted Admission, which notice shall (i) set forth the
name of the Qualified Organization that is the subject of such Permitted
Admission and a reasonably detailed description of the business and operations
of such Qualified Organization, (ii) contain a reasonably detailed description
of such Permitted Admission (including, without limitation, (x) a certification
of Boston Properties as to the type and amount of the consideration to be paid
or contributed to or on account of Boston Properties in connection therewith and
(y) the anticipated closing date of such Permitted Admission, which anticipated
closing date shall be no later than 120 days after the date of such Promote
Interest Offer Notice), (iii) be accompanied by a written agreement between
Boston Properties and such Qualified Organization that binds each of such
parties to effect such Permitted Admission, (iv) be accompanied by an MAI
appraisal for each Venture Property Interest that (i) as of such anticipated
closing date, will constitute a Qualified Venture Property Interest and (ii) was
acquired by the applicable Venture Entity during the then current Restriction
Period, each of which appraisals (x) shall be prepared by an Acceptable
Appraiser, (y) shall be dated no earlier than 30 days prior to the date of such
Promote Interest Offer Notice and (z) shall set forth such appraiser's
determination of the Fair Market Value (as of such anticipated closing date) of
the Venture Property Interest in question (such Fair Market Value determination
for each such Venture Property Interest, the "Initial Appraiser's
Determination"), (v) be accompanied by such documentation as is reasonably
necessary to corroborate the Initial Appraiser's Determination of the Fair
Market Value of each such Venture Property Interest, and (vi) constitute an
offer to convey (and/or cause the applicable Boston Properties Subsidiary(ies)
and Qualified BP Transferee(s) to convey, as the case may be) to the Common Fund
(and/or the applicable Common Fund Subsidiary) the Qualified Promote Interest
pertaining to each such Venture Property Interest for a purchase price equal to
the Promote Interest Purchase Price for such Qualified Promote Interest as of
the effective date of such conveyance (which Promote Interest Purchase Price
shall be determined in accordance with the provisions of Section 7.4(d) and, if
applicable, Section 7.6 below). If the Common Fund desires to accept such offer
with respect to all of such Qualified Promote Interests, then the Common Fund,
within 45 days after receiving a duly given Promote Interest Offer Notice, shall
deliver to Boston Properties a notice to that effect (each, a "Promote Interest
Acceptance Notice"), which notice shall indicate, with respect to each such
Qualified Promote Interest (each, an "Elected Promote Interest"), whether the
Common Fund agrees with Initial Appraiser's Determination of the Fair Market
Value of the Qualified Venture Property Interest that corresponds to such
Elected Promote Interest. If Boston Properties gives the Common Fund a Promote
Interest Offer Notice, then (i) Boston Properties from time to time shall allow
(or cause to be allowed) all officers, employees, attorneys, advisors,
accountants and other representatives (collectively, "Representatives") of the
Common Fund access at all reasonable times to the records and files, audits and
properties of each applicable Qualified Venture Entity, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs, of such Qualified Venture
Entity, (ii) Boston Properties shall from time to time provide (or cause to be
provided) all information regarding the business and affairs of such Qualified
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Venture Entity, including without limitation, information regarding leasing
negotiations, that the Common Fund may request and (iii) Boston Properties shall
from time to time be available, and shall cause its Representatives (and the
Representatives of such Qualified Venture Entity) to be available, at all
reasonable times to answer questions and provide information regarding the
business and affairs of such Qualified Venture Entity.
(b) If, after the date on which Boston Properties gives a Promote
Interest Offer Notice but before the date on which the Permitted Admission that
pertains thereto is effected, the Common Fund gives Boston Properties a
Development Property Acceptance Notice with respect to any Development Property
Interest (or the Common Fund and Boston Properties otherwise jointly acquire any
Development Property Interest), then the parties shall act in good faith to
structure the transaction involving such Development Property Interest such that
the Venture Entity that will hold such Development Property Interest will not
fail to comply with Section 514(c)(9)(E) of the Internal Revenue Code of 1986,
as amended (or, if applicable, any successor provision of the Internal Revenue
Code).
(c) If (i) Boston Properties properly gives the Common Fund a
Promote Interest Offer Notice with respect to any Permitted Admission, and (ii)
the Common Fund fails to give timely a Promote Interest Acceptance Notice in
response thereto, then Boston Properties may thereafter effect such Permitted
Admission, without further obligation under this Section 7.4 on account of such
Permitted Admission.
(d) If the Common Fund, in any Promote Interest Acceptance Notice,
indicates that it agrees with the Initial Appraiser's Determination of the Fair
Market Value of any applicable Qualified Venture Property Interest, then the
Promote Interest Purchase Price for the Elected Promote Interest that
corresponds to such Qualified Venture Property Interest shall be computed by the
Common Fund and Boston Properties based upon the Initial Appraiser's
Determination of the Fair Market Value of such Qualified Venture Property
Interest. If (i) the Common Fund, in any Promote Interest Acceptance Notice,
indicates that it does not agree with the Initial Appraiser's Determination of
the Fair Market Value of any applicable Qualified Venture Property Interest, and
(ii) such disagreement is not resolved within 15 days after the Common Fund
gives such Promote Interest Acceptance Notice, then the Fair Market Value of
such Qualified Venture Property Interest shall, for purposes of calculating the
Promote Interest Purchase Price for the corresponding Elected Promote Interest,
be determined in accordance with Section 7.6 below. If the Fair Market Value of
any Qualified Venture Property Interest is to be determined pursuant to Section
7.6 below, then, until at least 15 days after such determination is made, (i)
the applicable Permitted Admission shall not be effected, and (ii) the
corresponding Elected Promote Interest (as well as all of the other Elected
Promote Interests that were covered by the same Promote Interest Acceptance
Notice) shall not be conveyed to the Common Fund in accordance with Section
7.4(e) below. Notwithstanding the preceding sentence, Boston Properties may
elect, upon at least 30 days prior notice to the Common Fund, to convey all such
Elected Promote Interests to the Common Fund in accordance with Section 7.4(e)
below before any such determination is made, provided that, at the closing of
such conveyance, the amount to be
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paid by the Common Fund for each such Elected Promote Interest with respect to
which such a determination is being made shall be equal to 75% of the Promote
Interest Purchase Price that would otherwise be payable by the Common Fund if
such Promote Interest Purchase Price was calculated based on the Initial
Appraiser's Determination of the Fair Market Value of the corresponding
Qualified Venture Property Interest; and upon the determination, in accordance
with Section 7.6 below, of the Fair Market Value of each applicable Qualified
Venture Property Interest, the Promote Interest Purchase Price for the
corresponding Elected Promote Interest shall be recomputed based on such
determination and any adjustment between the parties thereto, together with
interest on the adjusted amount at the rate of 8% per annum from the date of
such closing until paid, shall be made within 30 days after such recomputation.
(e) If the Common Fund timely gives Boston Properties a Promote
Interest Acceptance Notice with respect to one or more Elected Promote
Interests, then, immediately prior to Boston Properties effecting the applicable
Permitted Admission (but in no case sooner), Boston Properties shall convey
(and/or cause the applicable Boston Properties Subsidiary(ies) or Qualified BP
Transferee(s)to convey) to the Common Fund (and/or to the Common Fund
Subsidiary(ies) that is a member of the applicable Venture Entity) each Elected
Promote Interest that was covered by such Promote Interest Acceptance Notice,
free and clear of all liens, encumbrances and other claims, for a purchase price
equal to the Promote Interest Purchase Price (as of the date of such conveyance)
for such Elected Promote Interest. In connection therewith, Boston Properties
shall execute and tender (and/or cause to be executed and tendered) all
documentation that the Common Fund may reasonably require in connection with
such conveyance (including, without limitation, (x) any required amendment to
the applicable Venture Entity Operating Agreement, and (y) representations and
warranties of the transferor, which shall be guarantied by Boston Properties if
it is not the transferor, that the transferor has good title to the applicable
Promote Interest and is transferring the same free and clear of any liens,
encumbrances and other claims). The closing of such conveyance shall take place
in the offices of the Common Fund's attorneys (or such other location as the
Common Fund may reasonably designate). Each party shall pay its own legal fees
in connection with such conveyance. Recording, transfer or similar taxes (if
any) arising in connection with such conveyance shall be paid by Boston
Properties. Moreover, all other costs and expenses relating to such conveyance
shall be paid by Boston Properties.
(f) Notwithstanding anything to the contrary contained herein, but
without limiting the restriction contained in Section 7.3 above, if the Common
Fund, in response to any Promote Interest Offer Notice, timely gives Boston
Properties a Promote Interest Acceptance Notice with respect to one or more
Elected Promote Interests, then in no event may Boston Properties effect the
applicable Permitted Admission unless and until all the Elected Promote
Interests covered by such Promote Interest Acceptance Notice are conveyed to the
Common Fund (and/or the applicable Common Fund Subsidiary) in accordance with
this Section 7.4.
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(g) Immediately following the conveyance of a Qualified Promote
Interest to the Common Fund (and/or to the Common Fund Subsidiary(ies) that is a
Member of the applicable Venture Entity), the capital account balance of each
member of the Venture Entity shall be equal to the product of such member's
Percentage Interest in such entity and the aggregate capital account balances of
such entity.
(h) This Article 7 is intended to permit the respective Venture
Entities to comply with Section 514(c)(9)(E) of the Internal Revenue Code of
1986, as amended (or, if applicable, any successor provision of the Internal
Revenue Code) and shall be interpreted consistently therewith.
Section 7.5 Additional Remedies. (a) If Boston Properties at any time
breaches its representations and warranties in Section 7.2 above or breaches its
obligations under Section 7.3 above, then (in addition to all rights and
remedies available to the Common Fund at law or in equity on account of such
breach) the Common Fund shall have the right, to be exercised by the Common
Fund's delivery of written notice to Boston Properties (each, a "Default
Exercise Notice"), to purchase all of the Promote Interests that, as of the date
such Exercise Notice is given, constitute Qualified Promote Interests, for a
purchase price equal to the Promote Interest Purchase Price of each of such
Qualified Promote Interests as of the date of the conveyance thereof in
accordance with the following sentence. If the Common Fund gives Boston
Properties a Default Exercise Notice with respect to any Qualified Promote
Interests, then (i) for purposes of determining the Promote Interest Purchase
Price of each such Qualified Promote Interest, the Fair Market Value of the
corresponding Qualified Venture Property Interest shall be determined in
accordance with Section 7.5(c) below, and (ii) Boston Properties shall convey
(and/or cause to be conveyed) each such Qualified Promote Interest, free and
clear of all liens, encumbrances and other claims, to the Common Fund (or, if
applicable, to the Common Fund Subsidiary that is a member of the corresponding
Venture Entity) within 30 days after such determination is made, for a purchase
price equal to the Promote Interest Purchase Price thereof as of the date of
such conveyance. In connection therewith, Boston Properties shall execute and
tender (and/or cause to be executed and tendered) all documentation that the
Common Fund may reasonably require in connection with such conveyance
(including, without limitation, (x) any required amendment to the applicable
Venture Entity Operating Agreement, and (y) representations and warranties of
the transferor, which shall be guarantied by Boston Properties if it is not the
transferor, that the transferor has good title to the applicable Promote
Interest and is transferring the same free and clear of any liens, encumbrances
and other claims). The closing of such conveyance shall take place in the
offices of the Common Fund's attorneys (or such other location as the Common
Fund may reasonably designate). All costs and expenses relating to such
conveyance shall be paid by Boston Properties.
(b) If an Uncontrollable QO Transaction occurs, then the Common Fund
shall have the right, to be exercised by the Common Fund's delivery of written
notice to Boston Properties (each, a "FMV Exercise Notice"), to purchase all of
the Promote Interests that, as of the date such Exercise Notice is given,
constitute Qualified
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Promote Interests, for a purchase price equal to the Promote Interest FMV Price
of each of such Qualified Promote Interests (to be calculated as of the date of
the conveyance of each of such Qualified Promote Interests in accordance with
the following sentence). If the Common Fund gives Boston Properties an FMV
Exercise Notice with respect to any Qualified Promote Interests, then (i) for
purposes of determining the Promote Interest FMV Price of each such Qualified
Promote Interest, the Fair Market Value of the corresponding Qualified Venture
Property Interest shall be determined in accordance with Section 7.5(c) below,
and (ii) Boston Properties shall convey (and/or cause to be conveyed) each such
Qualified Promote Interest, free and clear of all liens, encumbrances and other
claims, to the Common Fund (or, if applicable, to the Common Fund Subsidiary
that is a member of the corresponding Venture Entity) within 30 days after such
determination is made, for a purchase price equal to the Promote Interest FMV
Price thereof as of the date of such conveyance. In connection therewith, Boston
Properties shall execute and tender (and/or cause to be executed and tendered)
all documentation that the Common Fund may reasonably require in connection with
such conveyance (including, without limitation, (x) any required amendment to
the applicable Venture Entity Operating Agreement, and (y) representations and
warranties of the transferor, which shall be guarantied by Boston Properties if
it is not the transferor, that the transferor has good title to the applicable
Promote Interest and is transferring the same free and clear of any liens,
encumbrances and other claims). The closing of such conveyance shall take place
in the offices of the Common Fund's attorneys (or such other location as the
Common Fund may reasonably designate). All costs and expenses relating to such
conveyance shall be paid by Boston Properties.
(c) In any instance under this Section 7.5 where the Fair Market
Value of a Qualified Venture Property Interest is to be determined pursuant to
this Section 7.5(c), the following procedures shall be followed in connection
with such Qualified Venture Property Interest: Boston Properties and the Common
Fund, within 10 days after the date on which the Common Fund gives the
applicable Default Exercise Notice or the applicable FMV Exercise Notice, as the
case may be, shall select an Acceptable Appraiser to perform an MAI appraisal of
such Qualified Venture Property Interest and determine the Fair Market Value
thereof as of the applicable date. If, within such 10 day period, the parties
are unable to agree upon an Acceptable Appraiser, then either party may apply to
the American Arbitration Association to have an Acceptable Appraiser appointed
thereby, which appointment shall be made within 10 days after such application
is made. Such determination of the Fair Market Value of such Qualified Venture
Property Interest by the Acceptable Appraiser so selected or appointed (x) shall
be made by such Acceptable Appraiser within 15 days of its selection and (y)
shall be made in accordance with the provisions and definitions contained in
this Section 7.5(c). In rendering such determination, the Acceptable Appraiser
so selected shall not add to, subtract from or otherwise modify the provisions
of this Section 7.5(c) or the definition of "Fair Market Value" (and,
notwithstanding anything to the contrary contained herein, any such addition,
subtraction or modification shall be disregarded by the parties). Upon
completion of such appraisal, (i) such Acceptable Appraiser shall deliver its
determination of the Fair Market Value of such Qualified Venture Property
Interest (together with all supporting documentation) to the Common Fund and
Boston
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Properties, which determination shall be binding on the Common Fund and the
Advisor for purposes of this Article 7, and (ii) the Common Fund and Boston
Properties shall then compute the Promote Interest Purchase Price or the Promote
Interest FMV Price (as the case may be) for the corresponding Promote Interest
based on such Fair Market Value determination. In the case of a determination
for purposes of Section 7.5(a) above, Boston Properties shall in each instance
be responsible for all the fees and expenses of the Acceptable Appraiser. In the
case of a determination for purposes of Section 7.5(b) above, Boston Properties
and the Common Fund shall each be responsible for one-half of the fees and
expenses of the Acceptable Appraiser.
Section 7.6 Dispute Resolution Mechanism. In any instance under this
Article 7 where the Fair Market Value of any Qualified Venture Property Interest
is to be determined pursuant to this Section 7.6, the following procedures shall
be followed in connection therewith: the Common Fund, within 15 days after the
procedures in this Section 7.6 are invoked, shall, by notice to Boston
Properties, select an Acceptable Appraiser (the Acceptable Appraiser so
selected, the "Common Fund Appraiser") to perform an MAI appraisal of such
Qualified Venture Property Interest and determine the Fair Market Value of such
Qualified Venture Property Interest. The Fair Market Value of such Qualified
Venture Property Interest shall be so determined as of the anticipated closing
date for the corresponding Elected Promote Interest (or if such closing already
occurred, as of the actual closing date, as the case may be) (such anticipated
or actual closing date, as the case may be, the "Applicable Date"). Upon
completion of such appraisal, the Common Fund Appraiser shall deliver its
determination of the Fair Market Value of such Qualified Venture Property
Interest (such determination, the "Common Fund Appraiser's Determination") to
the Common Fund and Boston Properties, together with the underlying appraisal.
If the Common Fund Appraiser's Determination with respect to such Qualified
Venture Property Interest is equal to at least 95% of the Initial Appraiser's
Determination with respect to such Qualified Venture Property Interest, then the
Fair Market Value of such Qualified Venture Property Interest shall, for
purposes of this Article 7, be equal to the mathematical average of such Common
Fund Appraiser's Determination and such Initial Appraiser's Determination. If
the Common Fund Appraiser's Determination with respect to such Qualified Venture
Property Interest is less than 95% of the Initial Appraiser's Determination with
respect to such Qualified Venture Property Interest, then, within 10 days after
the Common Fund Appraiser's Determination is so delivered to the Common Fund and
Boston Properties, the Common Fund and Boston Properties shall select a third
Acceptable Appraiser (the "Third Appraiser") to perform an MAI appraisal of such
Qualified Venture Property Interest and determine the Fair Market Value thereof
as of the Applicable Date. If, within such 10 day period, the parties are unable
to agree upon the Third Appraiser, then either party may apply to the American
Arbitration Association to have an Acceptable Appraiser appointed thereby, which
appointment shall be made within 10 days after such application is made. Upon
the selection or appointment of the Third Appraiser, the Third Appraiser shall
be advised (x) that the determination of the Fair Market Value at issue shall be
governed by the definition of same set forth in this Agreement and (y) of the
requirement that the Third Appraiser select (without compromise) the
Determination (defined below), as between the Initial Appraiser's Determination
and the Common Fund
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Appraiser's Determination, that more accurately reflects the Fair Market Value
of such Qualified Venture Property Interest as of the Applicable Date. Within 30
days after the Third Appraiser is so selected or appointed, the Third Appraiser
shall perform an MAI appraisal of such Qualified Venture Property Interest and
select which of such Determinations more accurately reflects the Fair Market
Value of such Qualified Venture Property Interest as of the Applicable Date.
Upon making such selection, the Third Appraiser shall deliver such selection to
the Common Fund and Boston Properties in writing, and the Determination so
selected shall be binding on the parties and constitute the Fair Market Value of
such Qualified Venture Property Interest for the purposes of this Article 7.
Each of the Common Fund and Boston Properties shall pay the fees and expenses of
its own appraiser. The fees and expenses of the Third Appraiser, if any, shall
be borne by the losing party to the applicable arbitration. For purposes hereof,
"Determination" means, with respect to each Qualified Venture Property Interest
to which this Section 7.6 applies, either the Initial Appraiser's Determination
with respect thereto or the Common Fund Appraiser's determination with respect
thereto.
Section 7.7 Good Faith. Each of Boston Properties and the Common Fund
agrees that, in connection with the discharge of its obligations under this
Article 7, it shall act in good faith.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Notices. Except as otherwise provided in this Agreement, all
notices, demands, requests, consents, approvals and other communications (herein
collectively called "notices") that may or must be given hereunder, shall be in
writing, shall be deemed to have been properly given when received by the party
to whom such notice is addressed (or when such party refuses delivery), and
shall be personally delivered or sent by overnight express courier, postage
prepaid, addressed to the party to be so notified as follows:
If intended for the Common Fund, to:
Comptroller of the State of New York
as Trustee of the Common Retirement Fund
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Assistant Deputy Comptroller for
Investments and Cash Management
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With a copy to:
Comptroller of the State of New York
as Trustee of the Common Retirement Fund
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Assistant Counsel
With a copy to:
▇.▇. ▇▇▇▇▇▇ Investment Management
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇.▇. ▇▇▇▇▇▇ Investment Management
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If intended for Boston Properties, to:
Boston Properties Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
Boston Properties Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
and a copy to:
Goulston & Storrs, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Each party, upon not less than five (5) days notice to the other party (given in
accordance with this Section), shall each have the right, from time to time
during the term of this
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Agreement, to designate additional and/or substitute parties and/or address(es)
to receive notices on behalf of such party in accordance with this Section.
Section 8.2 No Assignment. Neither this Agreement nor any of the rights of
Boston Properties hereunder may be assigned, transferred or encumbered without
the Common Fund's prior written consent (which may be withheld in the Common
Fund's sole discretion), and any such purported assignment, transfer or
encumbrance without the Common Fund's prior written consent shall be void.
Neither this Agreement nor any of the rights of the Common Fund hereunder may be
assigned, transferred or encumbered without Boston Properties' prior written
consent (which may be withheld in Boston Properties' sole discretion), and any
such purported assignment, transfer or encumbrance without Boston Properties'
prior written consent shall be void.
Section 8.3 Entire Agreement. This Agreement, together with the documents
and instruments executed and delivered in connection herewith, set forth the
entire agreement between Boston Properties and the Common Fund relating to the
transactions contemplated hereby and all other prior agreements, understandings,
representations or statements, oral or written, relating directly to the subject
matter of this Agreement are superseded hereby.
Section 8.4 Counterparts. This Agreement may be executed by one or more of
the parties hereto on any number of separate counterparts, each of which, when
so executed, shall be deemed to be an original and all of which, when taken
together, shall be deemed to constitute one and the same instrument.
Section 8.5 Modification; Waiver. This Agreement and the terms hereof may
not be changed, waived, modified, supplemented, canceled, discharged or
terminated orally, but only by an instrument or instruments in writing executed
and delivered by the parties hereto. Neither the failure of either party to
exercise any power given such party hereunder or to insist upon strict
compliance by the other party with its obligations hereunder, nor any custom or
practice of the parties at variance with the terms hereof shall constitute a
waiver of either party's right to demand exact compliance with the terms hereof.
Section 8.6 Attorney's Fees. In the event that either party hereto shall
commence litigation against the other in connection herewith, the losing party
in such action shall reimburse the attorneys' fees and disbursements of the
prevailing party in such action.
Section 8.7 Severability; Construction. If any of the provisions of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be or become invalid or unenforceable, the remainder of this Agreement,
or the application of such provision or provisions to persons or circumstances
other than those as to which it shall be held invalid or unenforceable, shall
not be affected thereby; and every provision of this Agreement shall be valid
and enforceable to the fullest extent of the law.
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Section 8.8 Captions; Usage of Words of Reference; Relationship of the
Parties. Captions and Section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of
any provision of this Agreement. The words "hereto", "hereby", "herein",
"hereunder" and "hereof" shall refer to this Agreement in its entirety, together
with any exhibits and schedules attached to this Agreement, and any documents
incorporated by reference in this Agreement, unless specifically limited by the
provisions in question. As used in this Agreement, the masculine shall include
the feminine and neuter, the singular shall include the plural and the plural
shall include the singular, as the context may require. The use of the term
"including" in this Agreement shall mean in all cases "including but not limited
to" unless specifically designated otherwise. No rules of construction against
the drafter of this Agreement shall apply in any interpretation or enforcement
of this Agreement, any documents or certificates executed pursuant hereto, or
any provisions of any of the foregoing. Nothing in this Agreement shall be
deemed or construed to have created any joint venture or partnership
relationship between Boston Properties and the Common Fund, except as and to the
extent provided in Sections 2.2(c) and 3.1(c) above or in any Venture Entity
Operating Agreement that is entered into by the parties pursuant to this
Agreement.
Section 8.9 No Third Party Beneficiaries. Except as otherwise provided in
Article 5 above, the rights granted under this Agreement shall be solely for the
benefit of the parties hereto and their successors and permitted assigns, and no
third party shall have any claim to any such right or the benefit thereof.
Section 8.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to conflict of law principles.
Section 8.11 Confidentiality. Each of Boston Properties and the Common
Fund agrees that the existence of, the terms and provisions set forth in, and
the transactions contemplated by, this Agreement (all of the foregoing,
collectively, the "Confidential Information") are, subject to the terms of this
Section 8.11, confidential. Each of Boston Properties and the Common Fund
further agrees that, from and after the date hereof, it will use reasonable
efforts to cause the Confidential Information to be held in strict confidence
and not disclosed to any persons other than (i) employees, officers, directors,
prospective lenders and agents of such party (including such party's attorneys,
advisors, and third party consultants), or (ii) in connection with a Permitted
Transaction (as defined below) involving such party, unless and to the extent
such disclosure is required by applicable legal requirements, SEC filings,
supplemental filings, or judicial process. For purposes hereof, the term
"Permitted Transaction" shall mean (i) with respect to the Common Fund, any
transaction involving the Common Fund that is not prohibited by Article 2,
Article 3 or any other provision of this Agreement, and (ii) with respect to
Boston Properties, any transaction involving Boston Properties that is not
prohibited by Article 2, Article 3 or any other provision of this Agreement.
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Section 8.12 Successors. All of the provisions of this Agreement and of
any of the documents and instruments executed in connection herewith shall apply
to and be binding upon, and inure to the benefit of the Common Fund and Boston
Properties, and their successors and their permitted assigns.
Section 8.13 Non-Imputation Proceeds. If, in connection with the
acquisition by a Venture Entity of a Venture Property Interest from a Boston
Properties affiliate (or the admission of the Common Fund or a Common Fund
Subsidiary into a Venture Entity), such Venture Entity obtains a title insurance
policy that contains a Non-Imputation Endorsement (as defined below), then the
Common Fund (or the Common Fund Subsidiary that holds an interest in such
Venture Entity, as the case may be) shall be entitled to all insurance proceeds
payable to such Venture Entity under such policy, to the extent that such
proceeds would not have been payable to such Venture Entity in the absence of
such Non-Imputation Endorsement. For purposes hereof, a "Non-Imputation
Endorsement" shall mean a title policy endorsement that provides (in effect)
that the applicable title insurance company will not deny liability to the
insured Venture Entity on the grounds that such Venture Entity had knowledge of
a matter by reason of knowledge of such matter being imputed to such Venture
Entity from Boston Properties or a Boston Properties Subsidiary.
Section 8.14 Further Assurances. Each party, from and after the date
hereof, shall execute, acknowledge and/or deliver such other instruments as may
reasonably be requested by the other party in order to effectuate the purposes
of this Agreement; provided, however, that the foregoing provisions of this
Section 8.14 shall not obligate either party to execute, acknowledge or deliver
any instrument which would or might impose upon such party any additional
liability or obligations.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been entered into on the date
first above written.
COMPTROLLER OF THE STATE
OF NEW YORK AS TRUSTEE OF THE
COMMON RETIREMENT FUND
By:_____________________________
Name:
Title:
BOSTON PROPERTIES LIMITED PARTNERSHIP
By:_____________________________
Name:
Title:
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