OMNIBUS OPTION AGREEMENT
BY AND AMONG
BOSTON PROPERTIES LIMITED PARTNERSHIP
AND THE
GRANTORS NAMED HEREIN
Dated as of April 9, 1997
[THIS PAGE INTENTIONALLY LEFT BLANK]
TABLE OF CONTENTS
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Page
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ARTICLE I: THE OPTION......................................................................2
1.1 Grant of Option.......................................................2
1.2 Term and Exercise of Option...........................................2
1.3 Purchase Price and Payment............................................2
1.4 Additional Units. ...................................................2
ARTICLE II: CONTRACT TO PURCHASE AND CLOSING PROCEDURES....................................3
2.1 Purchase and Sale.....................................................3
2.2 Closing; Condition to Obligations.....................................3
2.3 Documents to be Delivered at Closing..................................5
2.4 Cessation of Public Offering..........................................6
2.5 Further Assurances....................................................6
2.6 Special Partner Distributions.........................................6
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF
GRANTORS...........................................................................7
3.1 Title to Interests....................................................7
3.2 Authority.............................................................8
3.3 Litigation............................................................8
3.4 No Other Agreements to Sell...........................................9
3.5 No Brokers............................................................9
3.6 Investment Representations and Warranties.............................9
3.7 NASD Affiliation.....................................................11
3.8 Covenant to Remedy Breaches..........................................11
ARTICLE IV: REPRESENTATIONS, WARRANTIES AND COVENANTS OF
OPTIONEE..........................................................................11
4.1 Authority............................................................11
4.2 No Brokers...........................................................12
4.3 Exercise of Options..................................................12
ARTICLE V: POWER OF ATTORNEY..............................................................12
5.1 Grant of Power of Attorney...........................................12
5.2 Limitation on Liability..............................................14
5.3 Ratification; Third Party Reliance...................................14
ARTICLE VI: DIRECT PURCHASES AND MERGERS
AND OTHER PARTNERSHIP MATTERS.....................................................15
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ARTICLE VII: MISCELLANEOUS................................................................16
7.1 Amendment............................................................16
7.2 Entire Agreement; Counterparts; Applicable Law.......................16
7.3 Assignability........................................................16
7.4 Titles...............................................................17
7.5 Third Party Beneficiary..............................................17
7.6 Severability.........................................................17
7.7 Equitable Remedies...................................................17
7.8 Disputes.............................................................17
7.9 Notices; Exercise of Grantor's Purchase Option.......................18
7.10 Waiver of Rights; Consents with Respect to Partnership Interests.....19
7.11 Computation of Time..................................................20
7.12 Survival.............................................................20
7.13 Nature of Option and Determination of Values.........................21
7.14 Time of the Essence..................................................21
EXHIBIT A. LIST AND DESCRIPTION OF ASSETS.......................................A-1
EXHIBIT B. NAMES AND ADDRESSES OF GRANTORS......................................B-1
EXHIBIT C. ACQUISITION EXHIBITS OF THE GRANTORS.................................C-2
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INDEX OF DEFINED TERMS
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Defined Term Section
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Acquisition Exhibit.................................... Recital
Aggregate Net Asset Valuation.......................... Article VI (a)
Ancillary Agreements................................... Section 2.2
Asset.................................................. Recital
Assignment............................................. Section 2.3
Attorney-in-Fact....................................... Section 5.1
Cessation Date......................................... Section 2.4
Closing Agent.......................................... Section 2.2
Closing Documents...................................... Section 2.2
Common Stock........................................... Recital
Company................................................ Recital
Consents............................................... Section 7.10
Conveyance Action...................................... Section 7.10
Direct Purchase........................................ Recital
Encumbrances........................................... Section 3.1
Final Closing.......................................... Section 2.2
FIRPTA................................................. Section 2.3
Grantor................................................ Recital
Interest............................................... Recital
Interest Acquisition................................... Recital
IPO.................................................... Recital
IPO Closing............................................ Section 2.2
Merger................................................. Recital
NASD................................................... Section 3.7
Non-Complying Grantor.................................. Section 2.2
Omnibus Consent........................................ Recital
Option Agreement....................................... Recital
Option Exercise Notice................................. Section 1.1
Option Termination Date................................ Section 1.1
Optionee............................................... Recital
Partnership Summary.................................... Section 3.6
Permitted Pledge....................................... Section 3.1
Pre-closing............................................ Section 2.2
Private Placement Memorandum........................... Section 3.6
Property Partnership................................... Recital
Purchase Option........................................ Section 1.1
Purchase Price......................................... Section 1.1
Registration Rights Agreement.......................... Section 3.6
Registration Statement................................. Section 5.1
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Securities Act........................................ Section 3.6
Total Value........................................... Section 1.1
Units................................................. Section 1.1
Waivers............................................... Section 7.10
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OMNIBUS OPTION AGREEMENT
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This Omnibus Option Agreement (including all exhibits, hereinafter
referred to as this "Option Agreement") relates to a proposed acquisition by
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Boston Properties Limited Partnership of (i) the properties, development
projects and development rights set forth on Exhibit A hereto (each such
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property, project or right, and all personal property related thereto or to the
operation thereof, is hereinafter referred to as an "Asset") and/or (ii) direct
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or indirect interests in such Assets. This Option Agreement is executed as of
this ninth day of April, 1997 by Boston Properties Limited Partnership, a
Delaware limited partnership ("Optionee"), and those Grantors whose names are
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set forth on Exhibit B hereto and who become signatories hereto (each, a
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"Grantor" and, collectively, the "Grantors");
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WHEREAS, each Grantor owns direct or indirect interests in one or more
of the Assets, as described more fully on a supplemental exhibit (hereinafter
referred to as such Grantor's "Acquisition Exhibit") delivered by or on behalf
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of such Grantor to Optionee (all such Acquisition Exhibits being attached hereto
as Exhibit C); and
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WHEREAS, all direct or indirect interests of whatever kind or nature of
a Grantor in a particular Asset (including without limitation, the Grantor's
interests in each such Asset set forth in Column (2) of such Grantor's
Acquisition Exhibit), are referred to individually as an "Interest"; and
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WHEREAS, Optionee desires to acquire from each Grantor, and each
Grantor desires to grant to Optionee, an option to purchase on the terms and
conditions set forth herein any or all Interests owned by such Grantor in the
Assets set forth in such Grantor's Acquisition Exhibit; and
WHEREAS, each Grantor acknowledges that the Optionee may decide that,
rather than acquiring (by way of the exercise of "Purchase Options" as defined
below) all of the direct and indirect interests in the entity that owns a
certain Asset (such an entity, a "Property Partnership," and such an
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acquisition, an "Interest Acquisition"), it is more desirable for it to acquire
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such Asset by a direct purchase of the Asset from the Property Partnership that
owns such Asset (a "Direct Purchase") or by a merger of the Property Partnership
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with and into the Optionee (a "Merger"); and whereas each Grantor, desiring to
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give the Property Partnership and the Optionee the right, in the Optionee's sole
discretion, to engage in any Direct Purchase or Merger on the terms and
conditions described herein without the need to seek any further consent or
action of the Grantor, will give hereby an irrevocable "Omnibus Consent" and
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related power of attorney as set forth in Article VI hereof; and
WHEREAS, the parties acknowledge that Optionee is considering the
purchase of each Grantor's Interests (or, alternatively, of the related Assets
by way of Mergers or Direct Purchases) in connection with a proposed initial
public offering (the "IPO") of shares of common stock ("Common Stock") of Boston
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Properties, Inc. (the "Company"), which will be the General Partner of Optionee.
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NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Optionee and Grantors agree as
follows:
ARTICLE I: THE OPTION
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1.1 Grant of Option. Each Grantor hereby grants to Optionee an option
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to purchase all right, title and interest of such Grantor in any or all of such
Grantor's Interests (each such option is hereinafter referred to as such
Grantor's "Purchase Option") on the terms and conditions hereinafter set forth
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and subject, in any event, to the last sentence of Section 7.13.
1.2 Term and Exercise of Option. Each Grantor's Purchase Option may be
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exercised, in whole or in part, at any time from and after the date hereof
through 5:00 p.m., Boston, Massachusetts, time on the earlier of (i) December
31, 1997 or (ii) the Cessation Date (as such term is defined in Section 2.4
hereof) (the earlier of such dates, the "Option Termination Date"). Each
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Grantor's Purchase Option can be exercised only by the giving of notice by
Optionee to such Grantor or any of its Attorneys-in-Fact named in Article VI
hereof, which notice (an "Option Exercise Notice") shall state (unless all of
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such Grantor's Interests will be purchased) which of the Interests of the
Grantor will be purchased by Optionee. If Optionee does not exercise a Grantor's
Purchase Option by the Option Termination Date, such Grantor's Purchase Option
shall automatically terminate and shall be of no further force and effect and
such Grantor shall have no further obligations hereunder.
1.3 Purchase Price and Payment. The full purchase price for the
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Interests of each Grantor that will be purchased upon the exercise of such
Grantor's Purchase Option (such purchase price with respect to such Grantor is
hereinafter referred to as such Grantor's "Purchase Price") shall be a number of
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Units (as hereinafter defined) having an aggregate value equal to the "Total
Value" set forth on such Grantor's Acquisition Exhibit. Notwithstanding the
prior sentence, in the event that Optionee does not acquire all of the Interests
of a Grantor set forth on such exhibit in connection with the exercise of such
Grantor's Purchase Option, then such Grantor's Purchase Price shall be a number
of Units having an aggregate value equal to the difference between (i) the
"Total Value" set forth on such Grantor's Acquisition Exhibit less (ii) the sum
of the "Net Value to Offeree" (set forth under Column (4) on such Grantor's
Acquisition Exhibit) of those Interests that will not be acquired by Optionee
upon exercise of such Grantor's Purchase Option. As used herein, the term
"Units" means Units representing a limited partnership interest in Optionee, and
the value of each Unit shall equal the public offering price of a share of
Common Stock of the Company in its initial public offering.
1.4 Additional Units. After the acquisition of Assets or Interests
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therein, the Optionee intends to pay a quarterly distribution in respect of each
outstanding Unit. The Optionee currently expects that such distribution will
initially be at a rate that, on an annualized basis, is at least 6.0% of the
value of a Unit (as such value is determined in the last
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sentence of Section 1.3). In the event the initial distribution (i.e., the first
distribution after the IPO) will be at a rate that is lower than such
expectation, then Optionee shall issue to each Grantor, prior to such first
distribution, additional Units so that the total initial distribution on all
Units issued to such Grantor equals, on an annualized basis, at least 6.0% of
the "total value" (i.e., the sum of the applicable amounts set forth under
Column (4) of such Grantor's Acquisition Exhibit) to which such Grantor is
entitled, in accordance with such Grantor's Acquisition Exhibit, in respect of
the Interests of such Grantor acquired by way of the exercise of such Grantor's
Purchase Option or by way of a Merger or Direct Purchase as provided for in
Article VI.
ARTICLE II: CONTRACT TO PURCHASE AND CLOSING PROCEDURES.
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2.1 Purchase and Sale. Upon Optionee's exercise of a Grantor's Purchase
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Option, such Grantor shall, subject to Section 2.2 hereof, sell, transfer,
assign, and convey to Optionee, and Optionee shall purchase and accept from such
Grantor, all right, title and interest of such Grantor in those Interests of
Grantor to be purchased by Optionee pursuant to an Option Exercise Notice, free
and clear of all Encumbrances (as defined in Section 3.1) for such Grantor's
Purchase Price, such sale to be closed in accordance with this Article II.
2.2 Closing; Condition to Obligations. In connection with or at any
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time after the exercise by Optionee of a Grantor's Purchase Option, Optionee
will specify a closing date, which date will be no later than December 31, 1997,
for the initial closing (the "Pre-closing") of the purchase and sale
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contemplated by such Grantor's Purchase Option. At or before such Pre-closing,
which shall be held at a place and time determined by Optionee in its sole
discretion, Optionee and Grantor (or its attorney-in-fact) will execute all
closing documents (the "Closing Documents") required by Optionee in accordance
with Section 2.3 and deliver the same to a person designated by Optionee (such
person, the "Closing Agent").
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Upon the exercise of a Grantor's Purchase Option, the transactions
contemplated by this Option Agreement and by the Closing Documents executed and
deposited in connection with such exercise will be consummated only if the IPO
Closing (as hereinafter defined) occurs simultaneously with or within fifteen
(15) business days after the date of the Pre- closing. For purposes hereof, the
"IPO Closing" will be deemed to have occurred if, but only if, the share of the
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net proceeds to the Company from the initial public offering of the Company's
Common Stock that is made available to Optionee is sufficient, as determined by
Optionee in its reasonable discretion, to enable Optionee (i) to acquire those
Interests of each Grantor to be purchased by Optionee pursuant to the Option
Exercise Notice and (ii) to apply such share of the net proceeds to acquire such
other properties or interests and to repay principal, interest and other amounts
due with respect to indebtedness and to meet such other obligations as may be
described in the Registration Statement on Form S-11 prepared and filed in
connection with such initial public offering, as the same is in effect on the
day of the IPO Closing. If the IPO Closing occurs within such fifteen (15)
business day period,
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(i) Optionee shall, contemporaneously with the IPO Closing, cause
to be delivered to each Grantor (x) a certificate of the
General Partner of Optionee certifying that such Grantor has
been or will be effective upon the Final Closing (as
hereinafter defined) admitted as a limited partner of Optionee
and that Optionee's books and records indicate that such
Grantor is the holder of the number of Units which are called
for pursuant to the Grantor's Purchase Price and (y) if such
Units are represented by certificates, a certificate or
certificates in the name of such Grantor for the number of
Units to which such Grantor is entitled,
(ii) upon receipt of the consideration set forth in clause (i)
above, the Closing Agent will release the Closing Documents to
Optionee, and
(iii) the transactions described or otherwise contemplated herein or
in the Closing Documents will thereupon be deemed to have been
consummated (such consummation, the "Final Closing").
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Notwithstanding the above, Optionee may, in its sole discretion, elect not to
complete the purchase of any or all Interests of any Grantor that identified, in
its Assignment delivered pursuant to Section 2.3, a breach of or other exception
with respect to Article III hereof or that has otherwise breached this Option
Agreement (any such Grantor, a "Non-Complying Grantor"), in which case Optionee
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shall, in lieu of the delivery with respect to such Grantor pursuant to clause
(i) above, notify the Closing Agent of such election and direct the Closing
Agent to return such Grantor's Closing Documents and Ancillary Agreements (as
defined below) to such Grantor (or, alternatively, if only certain Interests of
the Non-Complying Grantor will be acquired by Optionee, deliver the appropriate
consideration in respect of those Interests). The election of Optionee not to
purchase any or all of the Interests of a particular Non-Complying Grantor shall
not affect the obligations of any other Grantor hereunder, including any other
Non-Complying Grantor.
If the IPO Closing does not occur within fifteen (15) business days
after the date of the Pre-closing, then neither party shall have any obligations
under the Closing Documents executed in connection with the related exercise of
Grantors' Purchase Options or under any agreements or instruments executed in
connection with the transactions contemplated by such exercise (such other
agreements or instruments, collectively, "Ancillary Agreements"), the Closing
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Documents and the Ancillary Agreements shall be deemed null and void ab initio
and the Closing Agent will be directed to destroy the Closing Documents and any
Ancillary Agreements it holds and return to Optionee the consideration delivered
by Optionee to the Closing Agent in accordance with the previous paragraph. This
Option Agreement shall thereafter remain in effect and Optionee may thereafter
exercise the Grantors' Purchase Options again at any time before the Option
Termination Date.
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2.3 Documents to be Delivered at Closing. At the Pre-closing, each
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Grantor shall, directly or through the Attorney-in-Fact appointed pursuant to
Article V hereof, execute, acknowledge where deemed desirable or necessary by
Optionee, and deliver to the Closing Agent, in addition to any other documents
mentioned elsewhere herein, the following:
(a) An Assignment of Interests (the "Assignment"), which
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assignment shall be in a form satisfactory to Optionee, shall contain a warranty
of title that such Grantor owns such Grantor's Interests free and clear of all
Encumbrances (as defined in Section 3.1) and shall either (i) reaffirm the
accuracy of all representations and warranties and the satisfaction of all
covenants made by such Grantor in Article III hereof or (ii) if such
reaffirmation cannot be made, identify those representations, warranties and
covenants of Article III hereof (other than Section 3.8) with respect to which
circumstances have changed, represent that such Grantor has used all reasonable
efforts within its control to prevent and remedy such breach, and reaffirm the
accuracy of all other representations and warranties and the satisfaction of all
other covenants made by such Grantor in Article III hereof.
(b) If requested by Optionee, a certified copy of all
appropriate corporate resolutions or partnership actions authorizing the
execution, delivery and performance by Grantor of this Option Agreement, the
Ancillary Agreements, if any, and the Closing Documents.
(c) If requested by Optionee in the case of any Grantor that
is a corporation, partnership, trust or other entity, an opinion from counsel
for such Grantor in form and content reasonably acceptable to Optionee
substantially to the effect that:
(i) such Grantor is a limited partnership,
corporation or trust duly organized, validly existing and in good
standing under the laws of the state of its organization and, to
the knowledge of such counsel, had and has all applicable
corporate or partnership power and authority to enter into,
deliver and perform this Option Agreement, the Ancillary
Agreements, if any, and the Closing Documents;
(ii) the execution, delivery and performance of this
Option Agreement, the Ancillary Agreements, if any, and the
Closing Documents, and the transactions contemplated hereby and
thereby, do not and will not constitute a breach or a violation
of Grantor's partnership agreement, declaration of trust, charter
or bylaws, as applicable; and
(iii) all applicable partnership, corporate or other
action necessary for such Grantor to execute and deliver this
Option Agreement, the Ancillary Agreements, if any, and the
Closing Documents has been taken and that the same have been
validly executed and delivered and are the valid and binding
obligations of such Grantor enforceable against it in accordance
with
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their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other
similar laws affecting creditors' rights and remedies
generally.
(d) An affidavit establishing an exemption from the
withholding requirements of the Foreign Investment in Real Property Tax Act
("FIRPTA"), as amended. In the event Grantor fails to provide such an affidavit,
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Optionee shall be entitled to withhold from the purchase price and pay to the
Internal Revenue Service the sums required to be withheld pursuant to FIRPTA
(and the amount so withheld shall be paid by Optionee to the Internal Revenue
Service, in order for Optionee to comply with the provisions of Section 1445 of
the Internal Revenue Code of 1986 or successor similar legislation, as the same
may be amended hereafter).
(e) Any other documents reasonably necessary to assign,
transfer and convey such Grantor's Interests and effectuate the transactions
contemplated hereby, including filings with any applicable governmental
jurisdiction in which the Optionee is required to file its partnership
documentation.
2.4 Cessation of Public Offering. If at any time Optionee or its
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underwriter or underwriters determine in good faith to abandon the initial
public offering of the Company's Common Stock (the date of such determination
being referred to as the "Cessation Date"), Optionee will so advise each Grantor
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in writing and thereupon all parties hereto will be relieved of all obligations
under this Option Agreement, all Ancillary Agreements, and all Closing Documents
(except for obligations arising under Sections 3.5 and 4.2).
2.5 Further Assurances. Each Grantor will, from time to time, execute
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and deliver to Optionee all such other and further instruments and documents and
take or cause to be taken all such other and further action as Optionee may
reasonably request in order to effect the transactions contemplated by this
Agreement, including instruments or documents deemed necessary or desirable by
Optionee to effect and evidence the conveyance of such Grantor's Interests in
accordance with the terms of this Option Agreement.
2.6 Special Partner Distributions. The Optionee covenants that, with
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respect to each Property Partnership, it shall effect no purchase hereunder or
the closing of any Direct Purchase or Merger unless prior thereto:
(a) There is distributed to the partners of such Property
Partnership (in accordance with the distribution provisions of the applicable
partnership agreement) all cash reserves of such Property Partnership on hand
immediately prior to such closing (but adjusted to take into account prorations
of lease payments, utility payments and other receipts or disbursements that
have been received or made, or will be received or made after the IPO Closing,
in respect of a period of time that covers both a period before and after the
IPO
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Closing); or, alternatively, proper provision is made for such distribution to
occur promptly after closing; and
(b) Proper provision is made so that any receipt after such
closing that represents a tax abatement, in respect of a period of time before
the IPO Closing, on such Property Partnership's Asset or Assets are distributed
(net of any costs or expenses associated with receiving or obtaining such
abatement) to the partners of such Property Partnership in accordance with the
distribution provisions of the applicable partnership agreement.
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTORS
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As a material inducement to Optionee to enter into this Option
Agreement and to consummate the transactions contemplated hereby, each Grantor
hereby severally makes to Optionee each of the representations and warranties
set forth in this Article III, which representations and warranties are true as
of the date hereof. As a condition to Optionee's obligation to complete the
purchase of those Interests of Grantor specified in an Option Exercise Notice,
such representations and warranties must continue to be true as of the date of
the Pre-closing and as of the date of the Final Closing.
3.1 Title to Interests. Such Grantor owns beneficially and of record,
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free and clear of any claim, lien, pledge (except, prior to the Final Closing
only, as otherwise disclosed in writing to Optionee and its counsel prior to the
date hereof in a notice specifically referencing this Option Agreement (any such
pledge, a "Permitted Pledge")), voting agreement, option, charge, security
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interest, mortgage, deed of trust, encumbrance, rights of assignment, purchase
rights or other rights of any nature whatsoever of any third party
(collectively, "Encumbrances"), and has full power and authority to convey free
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and clear of any Encumbrances, its Interests and, upon delivery of an Assignment
by such Grantor conveying all or any of its Interests and payment for such
Interests as herein provided, Optionee (or its designee) will acquire good and
valid title thereto, free and clear of any Encumbrance except Encumbrances
created in favor of Optionee by the transactions contemplated hereby. Each of
such Grantor's Interests have been validly issued and Grantor has funded (or
will fund before the same is past due) all capital contributions and advances to
the partnership in which such Interest represents an interest that are required
to be funded or advanced prior to the date hereof and the dates of the
Pre-closing and the Final Closing. There are no agreements, instruments or
understandings with respect to any of such Grantor's Interests except as set
forth in the partnership agreement of the partnership in which an Interest
represents a limited partner or general partner interest. Such Grantor has no
equity interest, either direct or indirect, in any of the Assets except for the
Interests owned by it that are the subject of this Option Agreement. Such
Grantor covenants that no Permitted Pledge (i) will be in existence as of the
date of the Final Closing or (ii) shall prohibit the transfer, free of all
Encumbrances (including the Permitted Pledge) of the Interest so encumbered, and
such Grantor shall provide at the Final Closing such documentary evidence of the
release of any Permitted Pledge as Optionee may reasonably request. In making
the representations in this Section 3.1 regarding
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the absence of Encumbrances, each Grantor may assume that the consents and
waivers of rights set forth in Section 7.10 hereof have been given by all
partners of partnerships in which such Grantor's Interests represent direct or
indirect interests. If an Interest of a Grantor set forth on such Grantor's
Acquisition Exhibit is capital stock of a corporation, then, if Optionee elects
to acquire such Interest, at Optionee's request the Grantor will use all
reasonable efforts to cause such corporation to pay an in-kind dividend or
distribution to Grantor in the form of Grantor's pro rata share of such
corporation's direct or indirect interest in the Asset, and Grantor shall
deliver such dividend or distribution over to Optionee.
3.2 Authority. Such Grantor has full right, authority, power and
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capacity: (i) to enter into this Option Agreement and each agreement, document
and instrument to be executed and delivered by or on behalf of such Grantor
pursuant to this Option Agreement; (ii) to carry out the transactions
contemplated hereby and thereby; and (iii) to transfer, sell and deliver any or
all of such Grantor's Interests to Optionee (or its designee) upon exercise by
Optionee of such Grantor's Purchase Option and payment therefor in accordance
with this Option Agreement. This Option Agreement and each agreement, document
and instrument executed and delivered by or on behalf of such Grantor pursuant
to this Option Agreement constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of such Grantor, each
enforceable in accordance with their respective terms. The execution, delivery
and performance of this Option Agreement and each such agreement, document and
instrument by or on behalf of such Grantor: (x) does not and will not violate
such Grantor's partnership agreement, declaration of trust, charter or bylaws,
if applicable; (y) does not and will not violate any foreign, federal, state,
local or other laws applicable to such Grantor or require such Grantor to obtain
any approval, consent or waiver of, or make any filing with, any person or
authority (governmental or otherwise) that has not been obtained or made or
which does not remain in effect; and (z) does not and will not result in a
breach of, constitute a default under, accelerate any obligation under or give
rise to a right of termination of, any indenture or loan or credit agreement or
any other agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Grantor is a party or by which the property of
such Grantor is bound or affected, or result in the creation of any Encumbrance
on any of the property or assets of any partnership in which an Interest of such
Grantor represents an interest. In making the representations set forth in this
Section 3.2, each Grantor may assume that (i) the consents and waivers of rights
set forth in Section 7.10 hereof have been given by all partners of partnerships
in which such Grantor's Interests represent direct or indirect interests and
(ii) that, as of the date hereof and the date of the Pre-closing only, any
Permitted Pledge has been released.
3.3 Litigation. There is no litigation or proceeding, either
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judicial or administrative, pending or overtly threatened, affecting all or any
portion of such Grantor's Interests or such Grantor's ability to consummate the
transactions contemplated hereby. Such Grantor knows of no outstanding order,
writ, injunction or decree of any court, government, governmental entity or
authority or arbitration against or affecting all or any portion of its
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Interests, which in any such case would impair such Grantor's ability to enter
into and perform all of its obligations under this Option Agreement.
3.4 No Other Agreements to Sell. Such Grantor represents that it has
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made no agreement with, and will not enter into any agreement with, and has no
obligation (absolute or contingent) to, any other person or firm to sell,
transfer or in any way encumber any of such Grantor's Interests or to not sell
such Grantor's Interests, or to enter into any agreement with respect to a sale,
transfer or encumbrance of, or put or call right with respect to, such Grantor's
Interests. In making the representations set forth in this Section 3.4, each
Grantor may assume that (i) the consents and waivers of rights set forth in
Section 7.10 hereof have been given by all partners of partnerships in which
such Grantor's Interests represent direct or indirect interests and (ii) that,
as of the date hereof and the date of the Pre-closing only, any Permitted Pledge
has been released.
3.5 No Brokers. Such Grantor represents that it has not entered
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into, and covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of
Optionee to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
3.6 Investment Representations and Warranties.
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(a) Such Grantor has had an opportunity to review the "Summary
of Certain Provisions of the Operating Partnership Agreement and the
Registration Rights Agreement" and the discussion entitled "Tax Matters," each
of which was sent to the Grantor by the Company (collectively, including all
supplements thereto, if any, the "Partnership Summary"), and the Private
-------------------
Placement Memorandum of the Optionee dated April 3, 1997 (including all
supplements thereto, if any, the "Private Placement Memorandum") and understands
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the risks of, and other considerations relating to, the purchase of the Units.
Such Grantor, by reason of its business and financial experience, together with
the business and financial experience of those persons, if any, retained by it
to represent or advise it with respect to its investment in the Units, has such
knowledge, sophistication and experience in financial and business matters and
in making investment decisions of this type that it is capable of evaluating the
merits and risks of an investment in Optionee and of making an informed
investment decision, (ii) is capable of protecting its own interest or has
engaged representatives or advisors to assist it in protecting its interests and
(iii) is capable of bearing the economic risk of such investment. If such
Grantor retained a person to represent or advise it with respect to the
investment in Units that may be made hereby then, at Optionee's request, such
Grantor shall, prior to or at the Pre-closing, (i) acknowledge in writing such
representation and (ii) cause such representative or advisor to deliver a
certificate to Optionee containing such representations as are reasonably
requested by Optionee.
(b) Such Grantor understands that an investment in the
Optionee involves substantial risks. Such Grantor has been given the opportunity
to make a thorough
9
investigation of the proposed activities of Optionee and has been furnished with
materials relating to the Optionee and its proposed activities, including,
without limitation, the Private Placement Memorandum and the Partnership
Summary. Such Grantor has been afforded the opportunity to obtain any additional
information deemed necessary by such Grantor to verify the accuracy of any
representations made or information conveyed to the Grantor. Such Grantor
confirms that all documents, records, and books pertaining to its investment in
the Partnership and requested by such Grantor have been made available or
delivered to such Grantor. Such Grantor has had an opportunity to ask questions
of and receive answers from Optionee, or from a person or persons acting on
Optionee's behalf, concerning the terms and conditions of this investment. Such
Grantor has relied upon, and is making its investment decision solely upon, the
Private Placement Memorandum, the Partnership Summary and other written
information provided to the Grantor by or on behalf of Optionee.
(c) The Units to be issued to such Grantor if Optionee
acquires such Grantor's Interests will be acquired by such Grantor for its own
account (or if such Grantor is a trustee, for a trust account) for investment
only and not with a view to, or with any intention of, a distribution or resale
thereof, in whole or in part, or the grant of any participation therein, without
prejudice, however, to such Grantor's right (subject to the terms of the Units)
at all times to sell or otherwise dispose of all or any part of its Units under
an exemption from such registration available under the Securities Act of 1933,
as amended (the "Securities Act"), and applicable state securities laws, and
--------------
subject, nevertheless, to the disposition of its assets being at all times
within its control. Such Grantor was not formed for the specific purpose of
acquiring an interest in Optionee.
(d) Such Grantor acknowledges that (i) the Units to be issued
to such Grantor if Optionee acquires such Grantor's Interests have not been
registered under the Securities Act or state securities laws by reason of a
specific exemption or exemptions from registration under the Securities Act and
applicable state securities laws and, if such Units are represented by
certificates, such certificates will bear a legend to such effect, (ii) the
Company's and Optionee's reliance on such exemptions is predicated in part on
the accuracy and completeness of the representations and warranties of such
Grantor contained herein, (iii) such Units, therefore, cannot be resold unless
registered under the Securities Act and applicable state securities laws, or
unless an exemption from registration is available, (iv) there is no public
market for such Units, and (v) Optionee has no obligation or intention to
register such Units for resale under the Securities Act or any state securities
laws or to take any action that would make available any exemption from the
registration requirements of such laws. Such Grantor hereby acknowledges that
because of the restrictions on transfer or assignment of such Units to be issued
hereunder, which will be set forth in the partnership agreement of Optionee
and/or in a Lock-up and Registration Rights Agreement (as described in Section
5.1, the "Registration Rights Agreement"), the Grantor may have to bear the
-----------------------------
economic risk of the investment commitment evidenced by this Option Agreement
and any Units purchased hereby for an indefinite period of time, although (x)
under the terms of the partnership agreement of Optionee, as it will be in
effect at the time of the initial public offering of the Company's
10
Common Stock, Units will be redeemable at the request of the holder thereof at
any time after a period not exceeding fourteen months after their issuance for
cash or (at the option of the Company) for shares of the Company's Common Stock
and (y) the holder of any such shares of Common Stock issued upon a presentation
of Units for redemption will be afforded certain rights to have such Common
Stock registered for resale under the Securities Act or applicable state
securities laws under the Registration Rights Agreement.
(e) The address set forth under such Grantor's name in Exhibit
A is the address of the Grantor's principal residence or place of business, and
such Grantor has no present intention of becoming a resident of any country,
state or jurisdiction other than the country and state in which such residence
or principal place of business is sited.
3.7 NASD Affiliation. Each Grantor represents severally that neither
----------------
it nor any affiliate of such Grantor is a member, affiliate of a member or
person associated with a member of the National Association of Securities
Dealers, Inc. ("NASD"). Each Grantor further represents severally that neither
----
it nor any affiliate of such Grantor owns any stock or other securities of any
NASD member not purchased in the open market, or has made any outstanding
subordinated loans to an NASD member. (A company or natural person is presumed
to control a member of the NASD and is therefore presumed to constitute an
affiliate of such a member if the company or person is the beneficial owner of
10% or more of the outstanding securities of a member which is a corporation.
Additionally, a natural person is presumed to control a member of the NASD and
is therefore presumed to constitute an affiliate of such a member if such person
has the power to direct or cause the direction of the management or policies of
such member.)
3.8 Covenant to Remedy Breaches. Each Grantor covenants to use all
---------------------------
reasonable efforts within its control (i) to prevent the breach of any
representation or warranty of such Grantor hereunder, (ii) to satisfy all
covenants of such Grantor hereunder and (iii) to promptly cure any breach of a
representation, warranty or covenant of such Grantor hereunder upon its learning
of same.
ARTICLE IV: REPRESENTATIONS, WARRANTIES AND COVENANTS OF OPTIONEE
-----------------------------------------------------
As a material inducement to each Grantor to enter into this Option
Agreement and to consummate the transactions contemplated hereby, Optionee
hereby makes to each Grantor each of the representations and warranties set
forth in this Article IV, which representations and warranties shall be true as
of the date hereof, as of the date of the Pre-closing and as of the date of
consummation of the Final Closing.
4.1 Authority. Optionee has full right, authority, power and
---------
capacity: (i) to enter into this Option Agreement and each agreement, document
and instrument to be executed and delivered by or on behalf of it pursuant to
this Option Agreement; (ii) to carry out the transactions contemplated hereby
and thereby; and (iii) to issue Units to each Grantor to the
11
extent called for in such Grantor's Purchase Price and in accordance with the
terms of this Option Agreement. This Option Agreement and each agreement,
document and instrument executed and delivered by Optionee pursuant to this
Option Agreement constitutes, or when executed and delivered will constitute,
the legal, valid and binding obligation of Optionee, each enforceable in
accordance with their respective terms. The execution, delivery and performance
of this Option Agreement and each such agreement, document and instrument by
Optionee: (x) does not and will not violate the partnership agreement of
Optionee; (y) does not and will not violate any foreign, federal, state, local
or other laws applicable to Optionee or require Optionee to obtain any approval,
consent or waiver of, or make any filing with, any person or authority
(governmental or otherwise) that has not been obtained or made; and (z) does not
and will not result in a breach of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of, any indenture or
loan or credit agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which Optionee is a party or by which the
property of Optionee is bound or affected.
4.2 No Brokers. Optionee represents that it has not entered into, and
----------
covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of any
Grantor to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
4.3 Exercise of Options. If Optionee exercises the Purchase Option of
-------------------
any Grantor hereunder with respect to the Interest of such Grantor in a
particular Asset, it will exercise, with respect to Interests in such Asset, the
Purchase Options of all Grantors hereunder who have Interests in such Asset, but
this covenant shall in no way affect Optionee's right, pursuant to Section 2.2,
to elect not to complete a purchase from a Non-Complying Grantor.
ARTICLE V: POWER OF ATTORNEY
-----------------
5.1 Grant of Power of Attorney. Each Grantor hereby irrevocably
--------------------------
appoints ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and (if any Asset in which
such Grantor has an Interest is located in Washington, D.C., Virginia or
Maryland) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and (if any Asset in which such Grantor has an
Interest is located in any location other than Washington, D.C., Virginia or
Maryland) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and each of them individually and any successor
thereof from time to time (such persons or any such successor of any of them
acting in his, her or its capacity as Attorney-in-Fact pursuant to this Article
V or Article VI, the "Attorney-in-Fact") as the true and lawful Attorney-in-Fact
and agent of such Grantor, with the power to act in the name, place and stead of
such Grantor:
(a) To enter into the Registration Rights Agreement, which (i)
provides for the registration under the Securities Act of the Company's Common
Stock which may be issued to Grantor, in accordance with Optionee's partnership
agreement, upon the presentation of Units for redemption and (ii) provides for
restrictions on the transfer of Units (and any
12
Common Stock which may be issued in exchange for such Units) for a period not to
exceed two years (in the case of "Affiliated Holders," as defined in such
agreement) or one year (in the case of "Unaffiliated Holders," as defined in
such agreement) from their date of issuance.
(b) To take for such Grantor all steps deemed necessary or
advisable, if any, by Optionee in connection with the registration of the
Company's Common Stock under the Securities Act, including without limitation
(i) filing a registration statement and amendments thereto (the "Registration
------------
Statement") under the Securities Act that describes the benefits to be received
---------
by such Grantor in connection with the formation of the Operating Partnership
and the offering of the Company's Common Stock, (ii) distributing a preliminary
prospectus and prospectus regarding the offering of the Company's Common Stock
that contain such information as is deemed necessary or desirable to lawfully
effect the initial public offering of such shares, and (iii) to take such other
steps as the Attorney-in-Fact may deem necessary or advisable.
(c) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions, certificates,
consents, letters and other writings (including without limitation the execution
of Closing Documents, Ancillary Agreements, the partnership agreement, as then
in effect, of Optionee, any other documents relating to the acquisition by
Optionee of such Grantor's Interests, and any consents and waivers given or
contemplated by or in furtherance of Section 7.10 hereof) and, in general, to do
all things and to take all action which the Attorney-in-Fact in its sole
discretion may consider necessary or proper in connection with or to carry out
the transactions contemplated by this Option Agreement, the Ancillary
Agreements, if any, and the Closing Documents as fully as could such Grantor if
personally present and acting.
(d) To make, acknowledge, verify and file on behalf of such
Grantor applications, consents to service of process and such other undertakings
or reports as may be required by law with state commissioners or officers
administering state securities or Blue Sky laws and to take any other action
required to facilitate the exemption from registration of the Units and the
qualification of the Company's Common Stock under the securities or Blue Sky
laws of the jurisdictions in which the Units and the Company's Common Stock are
to be offered.
The Power of Attorney granted by each Grantor pursuant to this Article
V and Article VI and all authority conferred by this Article V and Article VI is
granted and conferred subject to and in consideration of the interests of the
Optionee, the Company and the other Grantors and is for the purpose of
completing the transactions contemplated by this Option Agreement. The Power of
Attorney of each Grantor granted by this Article V and Article VI and all
authority conferred by this Article V and Article VI is coupled with an interest
and therefore shall be irrevocable and shall not be terminated by any act of
such Grantor or by operation of law, whether by the death, disability,
incapacity or liquidation of such Grantor or by the occurrence of any other
event or events (including without limitation the termination of any
13
trust or estate for which such Grantor is acting as a fiduciary or fiduciaries),
and if, after the execution hereof, such Grantor shall die or become disabled or
incapacitated or is liquidated, or if any other such event or events shall occur
before the completion of the transactions contemplated by this Option Agreement,
the Attorney-in-Fact shall nevertheless be authorized and directed to complete
all such transactions as if such death, disability, incapacity, liquidation or
other event or events had not occurred and regardless of notice thereof. Each
Grantor acknowledges that the Attorneys-in-Fact named in the first paragraph of
this Section 5.1 have, and any successor thereof acting as Attorney-in-Fact may
have, an economic interest in the transactions contemplated by this Option
Agreement. Each Grantor agrees that, at the request of Optionee, it will
promptly execute a separate Power of Attorney on the same terms set forth in
this Article V and Article VI, such execution to be witnessed and notarized if
so requested by an Attorney-in-Fact.
5.2 Limitation on Liability. It is understood that each
-----------------------
Attorney-in-Fact assumes no responsibility or liability to any person by virtue
of the Power of Attorney granted by each Grantor hereby. Each Attorney-in-Fact
makes no representations with respect to and shall have no responsibility for
the formation of the Operating Partnership, the acquisitions of the Interests by
Optionee, the Registration Statement, the prospectus or any preliminary
prospectus relating to the offer and sale of Common Stock in the IPO, nor for
any aspect of the offering of the Common Stock, and he shall not be liable for
any error of judgment or for any act done or omitted or for any mistake of fact
or law except for his own gross negligence or willful misconduct. Each Grantor
agrees to indemnify the Attorney-in-Fact for and to hold the Attorney-in-Fact
harmless against any loss, claim, damage or liability incurred on its part
arising out of or in connection with it acting as the Attorney-in-Fact under the
Power of Attorney created by such Grantor hereby, as well as the cost and
expense of investigating and defending against any such loss, claim, damage or
liability, except to the extent such loss, claim, damage or liability is due to
the gross negligence or willful misconduct of the Attorney-in-Fact. Each Grantor
agrees that an Attorney-in-Fact may consult with counsel of his own choice (who
may be counsel for Optionee or the Company) and he shall have full and complete
authorization and protection for any action taken or suffered by him hereunder
in good faith and in accordance with the advice of such counsel. It is
understood that the Attorney-in-Fact may, without breaching any express or
implied obligation to the Grantor hereunder, release, amend or modify any other
Power of Attorney granted by any other Grantor hereunder or any other person
under any related agreement.
5.3 Ratification; Third Party Reliance. Each Grantor does hereby
----------------------------------
ratify and confirm all that the Attorney-in-Fact shall lawfully do or cause to
be done by virtue of the exercise of the powers granted unto him by such Grantor
under this Article V and Article VI, and such Grantor authorizes the reliance of
third parties on this Power of Attorney and waives its rights, if any, as
against any such third party for its reliance hereon.
14
ARTICLE VI: DIRECT PURCHASES AND MERGERS
----------------------------
AND OTHER PARTNERSHIP MATTERS
-----------------------------
The parties acknowledge and agree that Optionee may decide to purchase
one or more of the Assets (i) by a Direct Purchase from the Property Partnership
that beneficially owns it or (ii) by way of a Merger of such Property
Partnership with and into the Optionee. In order to facilitate any such Direct
Purchase or Merger without the need for further consent or action of the Grantor
and without such Direct Purchase or Merger causing a violation of any relevant
partnership agreement, each Grantor agrees as follows:
(a) Each Grantor by its execution hereof (i) with respect to
each Property Partnership in which an Interest owned by Grantor represents a
direct or indirect interest, gives such consent as is necessary (under the
partnership agreement of the applicable Property Partnership and under the
partnership agreement of any other partnership that has a direct or indirect
interest in such Property Partnership, to the extent Grantor is a partner of any
such partnership) to cause such Property Partnership to have authority to (i)
transfer all or substantially all of the assets (including an Asset) of such
Property Partnership to Optionee on such terms and conditions as such Property
Partnership and Optionee may agree or (ii) to merge with and into Optionee,
provided, however, that in either such case the total merger or purchase price
-------- -------
consideration shall equal the Aggregate Net Asset Valuation (as hereinafter
defined). The "Aggregate Net Asset Valuation" of a given Direct Purchase or
-----------------------------
Merger is the aggregate value that would be given to all persons with an
Interest in the applicable Property Partnership based on the information set
forth in Exhibit C hereto and, in any event, the Aggregate Net Asset Valuation,
---------
together with the terms of such Merger or Direct Purchase, must be such that
Grantor will receive, in respect of its Interest in the Asset of such Property
Partnership, the value (in Units) set forth for such Asset under Column (4) of
such Grantor's Acquisition Exhibit.
(b) Each Grantor by its execution hereof gives such consent as
is necessary to cause, with respect to the partnership agreement of each
partnership in which an Interest of such Grantor represents, directly or
indirectly, a limited partner or general partner interest, the approval of (x)
an amendment to such partnership agreement to enable such partnership, to the
extent permissible under applicable law, (i) to redeem the interest of any other
partner therein who has not agreed to become a party to this Option Agreement
and (ii) to distribute to all partners thereof, including any partner who has
not agreed to become a party to this Option Agreement, Units or cash received
upon any Direct Purchase or Merger in accordance with the preceding paragraph
(a), and (y) an amendment to such partnership agreement to cause a waiver by all
partners of such partnership agreement of the rights described in paragraph (c)
below.
(c) Each Grantor hereby waives any and all rights such Grantor
may have with respect to, and (to the extent possible) that any other person may
have with respect to, or that may accrue to such Grantor or other person upon
the occurrence of (i) a Direct Purchase
15
of an Asset or the Merger of a Property Partnership that owns such Asset, in
either case for a total merger or purchase price consideration equal to the
Aggregate Net Asset Valuation as described above, or (ii) the effecting of an
amendment to any partnership agreement for the purpose of enabling any such
Direct Purchase or Merger or implementing a similar waiver by all of the
partners of such partnership, such rights to include (but not be limited to) all
rights of notice, rights to response periods, and rights to prohibit, limit,
invalidate, otherwise restrict or impair such Merger, Direct Purchase or
amendment.
(d) Any Attorney-in-Fact may on behalf of each Grantor execute
such consents, amendments, releases, waivers or other instruments as such
Attorney-in-Fact deems necessary or desirable in connection with the foregoing,
including any consent on behalf of such Grantor in such Grantor's capacity as a
partner of any partnership described in clause (i) of paragraph (a) of this
Article VI.
ARTICLE VII: MISCELLANEOUS
-------------
7.1 Amendment. Any amendment hereto shall be effective only against
---------
those parties hereto who have acknowledged in writing their consent to such
amendment, provided that Optionee may amend this Option Agreement without notice
to or the consent of any Grantor (i) for the purpose of adding additional
Grantors as parties hereto or deleting Grantors as parties hereto and conforming
Exhibits B and C in connection with such additions or deletions and (ii) to
---------- -
conform, for clarity, any Grantor's Acquisition Exhibit to the extent the
description of such Grantor's interests in a particular Asset as set forth
therein does not accurately or completely reflect the entire Interest of such
Grantor in such Asset. No waiver of any provisions of this Option Agreement
shall be valid unless in writing and signed by the party against whom
enforcement is sought.
7.2 Entire Agreement; Counterparts; Applicable Law. This Option
----------------------------------------------
Agreement and all Ancillary Agreements (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which will be deemed an original and all of which
shall constitute one and the same instrument and (c) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware without giving effect to the conflict of law provisions
thereof. This Agreement shall be enforceable as between a Grantor and the
Optionee upon the execution by both of signature pages hereto, even though other
Grantors may be added hereto thereafter.
7.3 Assignability. This Option Agreement shall be binding upon, and
-------------
shall be enforceable by and inure to the benefit of, the parties hereto and
their respective heirs, legal representatives, successors and assigns; provided,
--------
however, that this Option Agreement may not be assigned (except by operation of
-------
law) by any Grantor without the prior written consent of the Optionee, and any
attempted assignment without such consent shall be void and of no effect; and
---
provided, further, that Optionee may assign this Option Agreement, the Closing
-------- -------
16
Documents and the Ancillary Agreements and any agreement contemplated hereunder
or thereunder, in whole or in part, or the right to acquire from a Grantor any
Interest after exercise of such Grantor's Purchase Option, to the Company or to
an affiliate of Optionee or the Company without the consent of any Grantor.
7.4 Titles. The titles and captions of the Articles, Sections and
------
paragraphs of this Option Agreement are included for convenience of reference
only and shall have no effect on the construction or meaning of this Option
Agreement.
7.5 Third Party Beneficiary. No provision of this Option Agreement is
-----------------------
intended, nor shall it be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any customer, affiliate,
stockholder, partner, director, officer or employee of any party hereto or any
other person or entity, provided, however, that Sections 5.3 and 7.10 of this
-------- -------
Option Agreement shall be enforceable by and shall inure to the benefit of the
persons described therein.
7.6 Severability. If any provision of this Option Agreement, or the
------------
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Option Agreement and application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Option Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision and to
execute any amendment, consent or agreement deemed necessary or desirable by
Optionee to effect such replacement.
7.7 Equitable Remedies. The parties hereto agree that irreparable
------------------
damage would occur to the Operating Partnership in the event that any of the
provisions of this Option Agreement were not performed by a Grantor in
accordance with their specific terms or were otherwise breached by a Grantor. It
is accordingly agreed that the Operating Partnership shall be entitled to an
injunction or injunctions to prevent breaches of this Option Agreement by a
Grantor and to enforce specifically the terms and provisions hereof in any
federal or state court located in Boston, Massachusetts (as to which the parties
agree to submit to jurisdiction for the purposes of such action), this being in
addition to any other remedy to which the Operating Partnership is entitled at
law or in equity.
7.8 Disputes
--------
(a) The parties agree that (subject to Section 7.8(b)) any and
all disputes, claims or controversies arising out of or relating to this
agreement that are not resolved by their mutual agreement shall be submitted to
final and binding arbitration before J.A.M.S./ENDISPUTE, or its successor, in
its Boston, Massachusetts office and pursuant to the United States Arbitration
Act and the provisions of J.A.M.S./ENDISPUTE's
17
Streamlined Arbitration Rules and Procedures in effect at the time. The parties
will cooperate with J.A.M.S./ENDISPUTE and with one another in selecting an
arbitrator from J.A.M.S./ENDISPUTE's panel of neutrals and in scheduling the
arbitration proceedings. The provisions of this Section may be enforced by any
court of competent jurisdiction.
In the event of any dispute relating to an Interest of a Grantor, the
consideration paid therefor or the actions taken in connection with the
Formation Transactions (as defined in the Private Placement Memorandum), the
arbitrator shall be instructed to value such Interest by (i) using the appraised
value of the Asset in which such Interest represents an interest and (ii)
determining the Grantor's allocable share, in accordance with the applicable
partnership agreement or partnership agreements, of the net proceeds of a sale
of such Asset for a price equal to such appraised value (after deducting (x) the
arbitrator's estimate of the costs of such a sale, and (y) the aggregate amount
of indebtedness at the time of the IPO of the Property Partnership that owned
such Asset or that otherwise was secured by such Asset). The arbitrator shall be
instructed that the appraised value of the Asset shall be determined (I) as of
the date of the IPO (even though the appraisal may be conducted some time
thereafter) and (II) by a qualified appraiser, chosen by the arbitrator, who
shall use customary and traditional methods for valuing properties of the same
type as the Asset.
By executing this agreement each party is agreeing (subject to Section
7.8(b)) to have all disputes, claims or controversies arising out of or relating
to this agreement decided by neutral arbitration, and is giving up any rights
he, she or it might possess to have those matters litigated in a court or jury
trial. By executing this agreement each party is giving up his, her or its
judicial rights to discovery and appeal except to the extent that they are
specifically provided for under this agreement.
(b) Notwithstanding Section 7.8(a), the Operating Partnership
may seek an injunction or injunctions or specific performance, in a court of
competent jurisdiction, to the extent permitted by Section 7.7.
7.9 Notices; Exercise of Grantor's Purchase Option. Any notice or
----------------------------------------------
demand that must or may be given under this Option Agreement (including an
Option Exercise Notice) or by law shall, except as otherwise provided, be in
writing and shall be deemed to have been given (i) when physically received by
personal delivery (which shall include the confirmed receipt of a telecopied
facsimile transmission), or (ii) three business days after being deposited in
the United States certified or registered mail, return receipt requested,
postage prepaid, or (iii) one business day after being deposited with a
nationally known commercial courier service providing next day delivery service
(such as Federal Express); addressed and delivered or telecopied (a) in the case
of a notice to the Optionee at the following address and telecopy number:
18
Boston Properties Limited Partnership
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and (b) in the case of a notice to a Grantor, at the address and telecopy number
set forth under such Grantor's name on such Grantor's signature page or in
Exhibit B hereto.
7.10 Waiver of Rights; Consents with Respect to Partnership Interests.
----------------------------------------------------------------
Each Grantor acknowledges that the agreements contained herein and the
transactions contemplated hereby and any actions taken in contemplation of the
transactions contemplated hereby (including the declaration of dividends in the
form of Interests or in the form of cash or Units following a Merger or Direct
Purchase of an Asset) may conflict with, and may not have been contemplated by,
the partnership agreement of one or more partnerships in which one or more of
such Grantor's Interests represents a direct or indirect interest or another
agreement among one or more holders of such Interests or one or more of the
partners of any such partnership. With respect to each partnership in which an
Interest of a Grantor represents a direct or indirect interest, each Grantor
expressly gives all Consents (and any consents necessary to authorize the proper
parties in interest to give all Consents) and Waivers necessary or desirable to
facilitate any Conveyance Action relating to such partnership (as each such
capitalized term is hereinafter defined).
As used herein, the term "Conveyance Action" means, with respect to any
-----------------
partnership having a direct or indirect ownership interest in any Asset, (i) the
conveyance or agreement to convey by a partner thereof or by any holder of an
indirect interest therein (whether or not such partner or holder is a Grantor
hereunder) of its direct or indirect interest in such partnership to Optionee or
the Company or to another person in connection with the formation of Optionee or
the IPO as described in the Private Placement Memorandum or (ii) the entering
into by any such partner or holder of any agreement relating to (x) the
formation of Optionee or the IPO as described in the Private Placement
Memorandum, (y) the direct or indirect acquisition by Optionee or the Company of
any such direct or indirect interest, or (z) the transactions described in or
contemplated by the Private Placement Memorandum, or (iii) the taking by any
such partner or holder of any action necessary or desirable to facilitate any of
the foregoing, including, without limitation, the following (provided that the
same are taken in furtherance of the foregoing): any sale or distribution to any
person of a direct or indirect interest in such partnership, the entering into
any agreement with any person that grants to such person the right to purchase a
direct or indirect interest in such partnership, and the giving of the Consents
and Waivers contained in this Section 7.10 or consents or waivers similar
thereto in form or purpose. As used herein, the term "Consents" means, with
--------
respect to any such partnership, any consent necessary or desirable under the
partnership agreement of
19
such partnership or any other agreement among all or any of the holders of
interests therein or any other agreement relating thereto or referred to therein
(i) to permit any and all Conveyance Actions relating to such partnership or to
amend such partnership agreement and/or other agreements so that no provision
thereof prohibits, restricts, impairs or interferes with any Conveyance Action
(such amendments to include, without limitation, the deletion of provisions
which cause a default under such agreement if interests therein are transferred
for cash or for property or in violation of notice, rights-of-first refusal or
other provisions), (ii) to admit Optionee as a substitute limited partner or
general partner of such partnership upon Optionee's acquisition of a limited or
general partner interest therein, respectively, and to adopt such amendment as
is necessary or desirable to effect such admission, (iii) to continue such
partnership following the transfer of interests therein to Optionee and (iv) to
cause such partnership to adopt an amendment to its partnership agreement that
provides that any disputes arising thereunder, or any disputes arising among the
partners of such partnership with respect to the Formation Transactions, shall
be resolved by arbitration in accordance with the procedures and principles set
forth in Section 7.8 hereof (and to cause any conflicting provision of such
partnership agreement to be repealed). As used herein, the term "Waivers" means,
-------
with respect to a partnership of which an Interest of a Grantor represents a
direct or indirect interest, the waiving of any and all rights that such Grantor
may have with respect to, and (to the extent possible) that any other person may
have with respect to, or that may accrue to such Grantor or other person upon
the occurrence of, a Conveyance Action relating to such partnership, including,
but not limited to, the following rights: rights of notice, rights to response
periods, rights to purchase the direct or indirect interests of another partner
in such partnership or to sell such Grantor's or other person's direct or
indirect interest therein to another partner, rights to sell such Grantor's or
other person's direct or indirect interest therein at a price other than as
provided herein, or rights to prohibit, limit, invalidate, otherwise restrict or
impair any such Conveyance Action or to cause a termination or dissolution of
such partnership because of such Conveyance Action. Each Grantor further
covenants that such Grantor will take no action to enjoin, or seek damages
resulting from, any Conveyance Action by any holder of a direct or indirect
interest in a partnership in which an Interest of such Grantor represents a
direct or indirect interest. The Waivers and Consents contained in this Section
7.10 shall terminate upon the termination of this Option Agreement, except as to
transactions completed hereunder prior to termination.
7.11 Computation of Time. Any time period provided for herein which
-------------------
shall end on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. of
the next full business day. All times are Eastern Time.
7.12 Survival. It is the express intention and agreement of the parties
--------
hereto that the representations, warranties and covenants of each Grantor set
forth in this Option Agreement shall survive the consummation of the
transactions contemplated hereby. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
such party for seeking redress for any breach of this agreement.
20
7.13 Nature of Option and Determination of Values. Without in any way
--------------------------------------------
affecting Optionee's rights and obligations hereunder, the parties acknowledge
that the net asset value of each Asset, and the "Net Value to Offeree" for each
Interest as set forth on each Grantor's Acquisition Exhibit, were determined
based on the assumption that all or most of the Grantor's Interests would be
acquired by Optionee upon exercise of Grantor's Purchase Option. The net asset
value available for distribution, in the aggregate, to all persons with a direct
or indirect limited partner interest in a Property Partnership was in no event
determined to be less than $50,000 (a Property Partnership the limited
partnership interest of which was assigned such value is hereinafter referred to
as a "Minimally Valued Partnership"), representing the agreed upon minimum value
to the Optionee of acquiring all of the interests in the limited partnership
interest of such Property Partnership. The Optionee agrees that in no event will
it exercise a Grantor's Purchase Option, without such Grantor's consent, in such
a manner that only a Grantor's Interests in Minimally Valued Partnerships will
be acquired.
7.14 Time of the Essence. Time is of the essence with respect to all
-------------------
obligations of Grantor under this Option Agreement.
21
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement, or caused this Option Agreement to be duly executed on its behalf, as
of the date first above written.
OPTIONEE: BOSTON PROPERTIES LIMITED
PARTNERSHIP
By: Boston Properties, Inc.,
as general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
22
GRANTOR SIGNATURE PAGE
----------------------
The undersigned, desiring to become one of the within named Grantors to
that certain Omnibus Option Agreement by and among Boston Properties Limited
Partnership and such Grantors, dated as of April 9, 1997, hereby becomes a party
to such Omnibus Option Agreement and agrees to the terms and conditions thereof
and makes the representations, warranties and covenants, and gives the consents,
waivers and power of attorney, contained therein. The undersigned agrees that
this signature page may be attached to any counterpart of said Omnibus Option
Agreement.
Signature line for Grantors
who are natural persons:
-------------------------------
Name:
Telecopy Number:
Address:
Signature line for trusts,
partnerships and other
entities:
-------------------------------
Name of Grantor
By:
---------------------------
Name:
Title:
Telecopy Number:
Address:
By the Grantor's execution of this Omnibus Option Agreement,
the Grantor grants a Power of Attorney to certain individuals
pursuant to Articles V and VI hereof and agrees to the arbitration
of any dispute arising hereunder pursuant to Section 7.8.
23
This is the form of Omnibus Option Agreement which was executed by Boston
Properties, Inc. and each of the grantors named below:
1. ▇▇▇▇▇ ▇▇▇▇▇ Apelbaum 2. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
3. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 4. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
5. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 6. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
7. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8. ▇▇▇▇ ▇. Camera
9. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 10. ▇▇▇▇▇▇ ▇▇▇▇▇
11. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Trust 12. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
13. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 14. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Trust
15. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 16. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
17. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 18. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
19. ▇▇▇ ▇. ▇▇▇▇▇ 20. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
21. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 22. M. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
23. First City Properties E Street, Inc. 24. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
25. ▇▇▇▇▇ ▇. ▇▇▇ 26. ▇▇▇▇▇ ▇. ▇▇▇▇
27. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 28. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
29. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 30. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
31. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 32. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
33. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 34. The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1984
Family Trust
35. Trustees under the Will of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 36. ▇▇▇▇▇▇▇ ▇▇▇▇▇
37. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 38. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
39. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust 40. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust
41. Ariel ▇▇▇▇▇▇▇ ▇▇▇▇ Trust 42. ▇▇▇▇▇ ▇▇▇▇
43. Jordana ▇▇▇▇▇ ▇▇▇▇ Trust 44. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Trust
45. ▇▇▇▇ Males Living Trust 46. ▇▇▇▇▇▇ & Company
47. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 48. Metropolitan Poultry Company
49. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 50. E. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
51. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 52. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
53. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 54. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
55. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 56. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
57. ▇. ▇. ▇▇▇▇▇▇▇, Inc. 58. ▇▇▇▇▇ ▇. ▇▇▇▇
59. Estate of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 60. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Family Trust
61. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 62. ▇▇▇▇▇ Van, Esq.
63. Viatech Systems, Inc. 64. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
65. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 66. ▇▇▇▇▇▇▇ ▇▇▇▇
67. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 68. The ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1983 Family Trust
69. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 70. ▇▇▇▇▇▇▇ Clineberg
71. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 72. ▇▇▇▇▇ ▇. ▇▇▇▇
73. ▇▇▇▇▇ ▇. ▇▇▇▇▇ 74. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
75. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 76. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
77. ▇▇▇ ▇▇▇▇▇▇ 78. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
79. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT C
[ACQUISITION EXHIBITS OF THE GRANTORS]
------------------------------------
C-1