1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
EQUITY OFFICE PROPERTIES TRUST,
EOP OPERATING LIMITED PARTNERSHIP,
BEACON PROPERTIES CORPORATION
and
BEACON PROPERTIES, L.P.
Dated as of September 15, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 THE MERGERS ..................................................... 3
1.1 THE MERGER .......................................................... 3
1.2 THE PARTNERSHIP MERGER .............................................. 3
1.3 CLOSING ............................................................. 3
1.4 EFFECTIVE TIME ...................................................... 4
1.5 EFFECT OF MERGER ON DECLARATION OF TRUST AND BY-LAWS ................ 4
1.6 EFFECT OF MERGER ON AGREEMENT OF LIMITED PARTNERSHIP ................ 4
1.7 TRUSTEES ............................................................ 4
1.8 EFFECT ON SHARES .................................................... 5
1.9 EFFECT ON PARTNERSHIP INTERESTS ..................................... 5
1.10 EXCHANGE RATIOS .................................................... 5
1.11 REGISTRATION RIGHTS AGREEMENT ...................................... 6
1.12 UNITHOLDER APPROVAL ................................................ 6
1.13 NO APPRAISAL RIGHTS ................................................ 6
1.14 EXCHANGE OF CERTIFICATES; PRE-CLOSING DIVIDENDS; FRACTIONAL
SHARES ............................................................. 6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF BEACON ........................10
2.1 ORGANIZATION, STANDING AND POWER OF BEACON ..........................10
2.2 BEACON SUBSIDIARIES .................................................10
2.3 CAPITAL STRUCTURE ...................................................11
2.4 OTHER INTERESTS .....................................................13
2.5 AUTHORITY; NONCONTRAVENTION; CONSENTS ...............................13
2.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES ........................................................15
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS ................................16
2.8 LITIGATION ..........................................................17
2.9 PROPERTIES ..........................................................17
2.10 ENVIRONMENTAL MATTERS ..............................................20
2.11 RELATED PARTY TRANSACTIONS .........................................20
2.12 EMPLOYEE BENEFITS ..................................................21
2.13 EMPLOYEE POLICIES ..................................................23
2.14 TAXES ..............................................................23
2.15 NO PAYMENTS TO EMPLOYEES, OFFICERS OR DIRECTORS ....................24
2.16 BROKER; SCHEDULE OF FEES AND EXPENSES ..............................24
2.17 COMPLIANCE WITH LAWS ...............................................25
2.18 CONTRACTS; DEBT INSTRUMENTS ........................................25
2.19 OPINION OF FINANCIAL ADVISOR .......................................27
2.20 STATE TAKEOVER STATUTES ............................................27
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2.21 INVESTMENT COMPANY ACT OF 1940 .....................................27
2.22 DEFINITION OF KNOWLEDGE OF BEACON ..................................27
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EOP ...........................27
3.1 ORGANIZATION, STANDING AND POWER OF EOP .............................28
3.2 EOP SUBSIDIARIES ....................................................28
3.3 CAPITAL STRUCTURE ...................................................29
3.4 OTHER INTERESTS .....................................................30
3.5 AUTHORITY; NONCONTRAVENTION; CONSENTS ...............................31
3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES .......................................................32
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS ................................33
3.8 LITIGATION ..........................................................34
3.9 PROPERTIES ..........................................................34
3.10 ENVIRONMENTAL MATTERS ..............................................36
3.11 TAXES ..............................................................36
3.12 BROKERS; SCHEDULE OF FEES AND EXPENSES .............................37
3.13 COMPLIANCE WITH LAWS ...............................................37
3.14 CONTRACTS; DEBT INSTRUMENTS ........................................37
3.15 OPINION OF FINANCIAL ADVISOR .......................................38
3.16 STATE TAKEOVER STATUTES ............................................38
3.17 INVESTMENT COMPANY ACT OF 1940 .....................................38
3.18 DEFINITION OF KNOWLEDGE OF EOP .....................................38
3.19 EOP NOT AN INTERESTED STOCKHOLDER ..................................38
ARTICLE 4 COVENANTS .......................................................38
4.1 CONDUCT OFBEACON'S AND BEACON PARTNERSHIP'S
BUSINESS PENDING MERGER ...........................................38
4.2 CONDUCT OF EOP'S AND EOP PARTNERSHIP'S BUSINESS
PENDING MERGER ....................................................42
4.3 NO SOLICITATION .....................................................44
4.4 AFFILIATES ..........................................................45
4.5 OTHER ACTIONS .......................................................46
ARTICLE 5 ADDITIONAL COVENANTS ............................................46
5.1 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT; BEACON SHAREHOLDERS MEETING, BEACON UNITHOLDERS
CONSENT SOLICITATION AND EOP SHAREHOLDERS MEETING .................46
5.2 ACCESS TO INFORMATION: CONFIDENTIALITY ..............................50
5.3 REASONABLE BEST EFFORTS; NOTIFICATION ...............................50
5.4 TAX TREATMENT .......................................................51
5.5 PUBLIC ANNOUNCEMENTS ................................................52
5.6 LISTING .............................................................52
5.7 TRANSFER AND GAINS TAXES ............................................52
5.8 BENEFIT PLANS AND OTHER EMPLOYEE ARRANGEMENTS .......................53
5.9 INDEMNIFICATION .....................................................54
5.10 DECLARATION OF DIVIDENDS AND DISTRIBUTIONS .........................56
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5.11 TRANSFER OF MANAGEMENT COMPANY SHARES ..............................57
5.12 NOTICES ............................................................57
5.13 RESIGNATIONS .......................................................57
5.14 THIRD PARTY MANAGEMENT AGREEMENTS ..................................57
5.15 EXISTING RESTRICTIONS ON RESALE OF CERTAIN
BEACON PROPERTIES ................................................57
5.16 AGREEMENT TO HOLD CERTAIN PROPERTIES AND
MAINTAIN CERTAIN INDEBTEDNESS ....................................57
5.17 RWLP CORP ..........................................................58
ARTICLE 6 CONDITIONS ......................................................58
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER .......................................................58
6.2 CONDITIONS TO OBLIGATIONS OF EOP AND EOP
PARTNERSHIP ......................................................59
6.3 CONDITIONS TO OBLIGATIONS OF BEACON AND BEACON
PARTNERSHIP ......................................................60
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER ...............................62
7.1 TERMINATION .........................................................62
7.2 CERTAIN FEES AND EXPENSES ...........................................64
7.3 EFFECT OF TERMINATION ...............................................66
7.4 AMENDMENT ...........................................................66
7.5 EXTENSION; WAIVER ...................................................66
ARTICLE 8 GENERAL PROVISIONS ..............................................67
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES .......................67
8.2 NOTICES .............................................................67
8.3 INTERPRETATION ......................................................68
8.4 COUNTERPARTS ........................................................68
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES ......................68
8.6 GOVERNING LAW .......................................................68
8.7 ASSIGNMENT ..........................................................69
8.8 ENFORCEMENT .........................................................69
8.9 SEVERABILITY ........................................................69
8.10 EOP EXTENSION OPTION ...............................................69
8.11 EXCULPATION ........................................................70
EXHIBITS
EXHIBIT "A"--ARTICLES OF MERGER
EXHIBIT "B"--CERTIFICATE OF MERGER
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INDEX OF DEFINED TERMS
AICPA STATEMENT ............................................................5.1(B)
ACQUISITION PROPOSAL .......................................................4.3(A)
ACTION .....................................................................8.10
AFFILIATES .................................................................4.4
AGREEMENT ..................................................................PREAMBLE
ARTICLES OF MERGER .........................................................B
AVERAGE CLOSING PRICE ......................................................7.1(J)
BASE AMOUNT ................................................................7.2
BEACON .....................................................................PREAMBLE
BEACON COMMON SHARE ........................................................1.10(A)
BEACON DISCLOSURE LETTER ...................................................ART. 2
BEACON FINANCIAL STATEMENT DATE ............................................2.7
BEACON MATERIAL ADVERSE CHANGE .............................................2.7
BEACON MATERIAL ADVERSE EFFECT .............................................2.1
BEACON OP UNIT .............................................................1.10(C)
BEACON OTHER INTERESTS .....................................................2.4
BEACON PARTNER APPROVALS ...................................................1.12
BEACON PARTNERSHIP .........................................................PREAMBLE
BEACON PARTNERSHIP AGREEMENT ...............................................1.10(C)
BEACON PREFERRED SHARE .....................................................1.10(B)
BEACON PREFERRED UNIT ......................................................1.10(D)
BEACON PROPERTIES ..........................................................2.9(A)
BEACON RENT ROLL ...........................................................2.9(E)
BEACON SEC DOCUMENTS .......................................................2.6
BEACON SHAREHOLDER APPROVALS ...............................................2.5(A)
BEACON SHAREHOLDERS MEETING ................................................5.1(E)
BEACON SPACE LEASE .........................................................2.9(E)
BEACON STOCK OPTIONS .......................................................2.3(B)
BEACON SUBSIDIARIES ........................................................2.2(A)
BEACON VOTING AGREEMENT ....................................................J
BEAMET .....................................................................2.14(B)
BREAK-UP FEE ...............................................................7.2
BREAK-UP FEE TAX OPINION ...................................................7.2
BREAK-UP EXPENSES ..........................................................7.2
CERTIFICATE OF MERGER ......................................................D
CERTIFICATES ...............................................................1.14(C)
CLOSING ....................................................................1.3
CLOSING DATE ...............................................................1.3
CODE .......................................................................E
COMMITMENT .................................................................4.1(I)
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CONSTRUCTION COMPANY ..................................................I
CONSTRUCTION COMPANY STOCK PURCHASE AGREEMENT .........................I
CONTROLLED GROUP MEMBER ...............................................2.12
DEPARTMENT ............................................................1.4
DESIGN COMPANY ........................................................I
DESIGN COMPANY STOCK PURCHASE AGREEMENT ...............................I
DRULPA ................................................................1.2
EFFECTIVE TIME ........................................................1.4
EMPLOYEE PLAN .........................................................2.12
ENCUMBRANCES ..........................................................2.9(A)
EOP ...................................................................PREAMBLE
EOP BYLAWS ............................................................1.5
EOP COMMON SHARE ......................................................1.10(A)
EOP DECLARATION OF TRUST ..............................................1.5
EOP DISCLOSURE LETTER .................................................ART. 3
EOP FINANCIAL STATEMENT DATE ..........................................3.7
EOP MANAGEMENT CORP ...................................................I
EOP MATERIAL ADVERSE CHANGE ...........................................3.7
EOP MATERIAL ADVERSE EFFECT ...........................................3.1
EOP OPTIONS ...........................................................3.3(B)
EOP OP UNIT ...........................................................1.10(C)
EOP PARTNER APPROVALS .................................................1.12
EOP PARTNERSHIP .......................................................PREAMBLE
EOP PARTNERSHIP AGREEMENT .............................................1.6
EOP PREFERRED SHARE ...................................................1.10(B)
EOP PREFERRED UNIT ....................................................1.10(D)
EOP PROPERTIES ........................................................3.9(A)
EOP RENT ROLL .........................................................3.9(G)
EOP SEC DOCUMENTS .....................................................3.6
EOP SHAREHOLDER APPROVALS .............................................3.5(A)
EOP SHAREHOLDERS MEETING ..............................................5.1(C)
EOP SPACE LEASE .......................................................3.9(G)
EOP SUBSIDIARIES ......................................................3.1
EOP VOTING AGREEMENT ..................................................K
ERISA .................................................................2.12
EXCHANGE ACT ..........................................................2.6
EXCHANGE AGENT ........................................................1.14(A)
EXCHANGE FUND .........................................................1.14(B)
EXCHANGE RATIO ........................................................1.10(A)
FAIR MARKET VALUE .....................................................1.14(G)
FINAL COMPANY DIVIDEND ................................................1.14(D)
FORM S-4 ..............................................................5.1(A)
GAAP ..................................................................2.6
GOVERNMENTAL ENTITY ...................................................2.5(C)
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HAZARDOUS MATERIALS ...................................................2.10
INDEBTEDNESS ..........................................................2.18(B)
INDEMNIFIED PARTIES ...................................................5.9(A)
INDEMNIFYING PARTIES ..................................................5.9(A)
INTERESTED STOCKHOLDER ................................................3.19
KNOWLEDGE OF EOP ......................................................3.18
KNOWLEDGE OF BEACON ...................................................2.22
LAWS ..................................................................2.5(C)
LIENS .................................................................2.2(B)
MANAGEMENT COMPANY ....................................................I
MANAGEMENT COMPANY STOCK PURCHASE AGREEMENT ...........................I
MERGER ................................................................A
MERGERS ...............................................................C
MERGER CONSIDERATION ..................................................1.10(B)
MGCL ..................................................................1.1
NYSE ..................................................................1.14(G)
OUTSIDE PROPERTY MANAGEMENT AGREEMENTS ................................2.18(F)
PARTNER APPROVALS .....................................................1.12
PARTNERSHIP MERGER ....................................................C
PAYOR .................................................................7.2
PENSION PLAN ..........................................................2.12
PERSON ................................................................2.2(A)
PREFERRED EXCHANGE RATIO ..............................................1.10(B)
PREFERRED UNIT EXCHANGE RATIO .........................................1.10(D)
PRICING PERIOD ........................................................7.1(J)
PROHIBITED TRANSACTION ................................................2.12(C)
PROPERTY RESTRICTIONS .................................................2.9(A)
PROXY STATEMENT .......................................................5.1(A)
QUALIFYING INCOME .....................................................7.2
RECIPIENT .............................................................7.2
REGISTRATION RIGHTS AGREEMENT .........................................1.11
REIT ..................................................................2.14(B)
REIT REQUIREMENTS .....................................................7.2
SEC ...................................................................2.5(C)
SECRETARY .............................................................1.4
SHAREHOLDER APPROVALS .................................................3.5(A)
STOCK PURCHASE AGREEMENTS .............................................I
SUBSIDIARY ............................................................2.2(A)
SUPERIOR ACQUISITION PROPOSAL .........................................4.3(D)
SURVIVING PARTNERSHIP .................................................1.2
SURVIVING TRUST .......................................................1.1
TAKEOVER STATUTE ......................................................2.20
TAXES .................................................................2.14(A)
TAX PROTECTION AGREEMENT ..............................................2.18(J)
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THIRD PARTY PROVISIONS ................................................8.5
TITLE 8 ...............................................................1.1
TRANSFER AND GAINS TAXES ..............................................5.7
UNIT EXCHANGE RATIO ...................................................1.10(C)
WELFARE PLAN ..........................................................2.12
1940 ACT ..............................................................2.21
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
September 15, 1997 by and among EQUITY OFFICE PROPERTIES TRUST, a Maryland real
estate investment trust ("EOP"), EOP OPERATING LIMITED PARTNERSHIP, a Delaware
limited partnership ("EOP Partnership"), BEACON PROPERTIES CORPORATION, a
Maryland corporation ("Beacon"), and BEACON PROPERTIES, L.P., a Delaware limited
partnership ("Beacon Partnership").
R E C I T A L S:
A. The Board of Trustees of EOP and the Board of Directors of Beacon
deem it advisable and in the best interests of their respective shareholders,
upon the terms and subject to the conditions contained herein, that Beacon shall
merge with and into EOP (the "Merger").
B. Upon the terms and subject to the conditions set forth herein, EOP
and Beacon shall execute Articles of Merger (the "Articles of Merger") in
substantially the form attached hereto as Exhibit A and shall file such Articles
of Merger in accordance with Maryland law to effectuate the Merger.
C. EOP, as the managing general partner of EOP Partnership, and Beacon,
as the sole general partner of Beacon Partnership, deem it advisable and in the
best interests of their respective limited partners, subject to the conditions
and other provisions contained herein, that Beacon Partnership shall merge with
and into EOP Partnership (or a limited liability company owned entirely,
directly and/or indirectly, by EOP Partnership, or a limited partnership owned
entirely, directly and/or indirectly, by EOP Partnership, as determined by EOP
and EOP Partnership), with the holders of partnership interests in Beacon
Partnership receiving in any event units of limited partnership interest in EOP
Partnership, as set forth herein (the "Partnership Merger" and, together with
the Merger, the "Mergers").
D. Upon the terms and subject to the conditions set forth herein, EOP
Partnership and Beacon Partnership shall execute a Certificate of Merger (the
"Certificate of Merger") in substantially the form attached hereto as Exhibit B
and shall file such Certificate of Merger in accordance with Delaware law to
effectuate the Partnership Merger.
E. For federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall
constitute a plan of reorganization under Section 368 of the Code.
F. For federal income taxes, it is intended that the Partnership
Merger, regardless of form, be treated as a contribution by Beacon Partnership
of all of its
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assets to EOP Partnership in exchange for partnership interests in EOP
Partnership, as provided for herein, under Section 721 of the Code, and a
distribution of such partnership interests by Beacon Partnership to its partners
under Section 731 of the Code.
G. EOP and Beacon have each received a fairness opinion relating to the
transactions contemplated hereby as more fully described herein.
H. EOP, EOP Partnership, Beacon and Beacon Partnership desire to make
certain representations, warranties and agreements in connection with the
Mergers.
I. Concurrently with the execution of this Agreement and as an
inducement to EOP and EOP Partnership to enter into this Agreement, each of the
holders of voting capital stock of each of Beacon Property Management
Corporation, a Delaware corporation (the "Management Company"), Beacon Design
Corporation, a Massachusetts corporation (the "Design Company"), and Beacon
Construction Company, Inc., a Massachusetts corporation (the "Construction
Company"), other than Beacon Partnership, has entered into a Stock Purchase
Agreement relating to the voting capital stock of the respective companies (the
"Management Company Stock Purchase Agreement," the "Design Company Stock
Purchase Agreement" and the "Construction Company Stock Purchase Agreement,"
respectively and, collectively, the "Stock Purchase Agreements"), providing for
the sale of all of the outstanding voting capital stock (other than any such
voting capital stock held by Beacon Partnership) of the Management Company, the
Design Company and the Construction Company, respectively, to Equity Office
Properties Management Corp. ("EOP Management Corp.") or its assigns.
J. As an inducement to EOP to enter into this Agreement, certain
members of the Xxxxxxxxx and Xxxxxx families and trusts and partnerships
established for the benefit of the members of the Xxxxxxxxx and Xxxxxx families
have entered into or will (within ten (10) business days following the date of
this Agreement) enter into a voting agreement (each, a "Beacon Voting
Agreement") pursuant to which such person or entity has agreed, among other
things, to vote his or its Beacon Common Shares (as defined in Section 1.10(a)
of this Agreement) and Beacon OP Units (as defined in Section 1.10(c) of this
Agreement) to approve this Agreement, the respective Mergers and any other
matter which requires his or its vote in connection with the transactions
contemplated by this Agreement.
K. As an inducement to Beacon to enter into this Agreement, each of
several trusts established for the benefit of members of the family of Xxxxxx
Xxxx, Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners Limited Partnership,
Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners Limited Partnership II,
Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners Limited Partnership III,
Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners Limited Partnership IV, ZML
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Partners Limited Partnership, ZML Partners Limited Partnership II, ZML Partners
Limited Partnership III and ZML Partners Limited Partnership IV has entered into
or will (within ten (10) business days of the date of this Agreement) enter into
a voting agreement (each, an "EOP Voting Agreement") pursuant to which such
person or entity has agreed, among other things, to vote his or its EOP Common
Shares (as defined in Section 1.10(a) of this Agreement) and EOP OP Units (as
defined in Section 1.10(c) of this Agreement) to approve this Agreement, the
respective Mergers and any other matter which requires his or its vote in
connection with the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGERS
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Title 8 of the Corporations and
Associations Article of the Annotated Code of Maryland, as amended ("Title 8"),
and the Maryland General Corporation Law ("MGCL"), Beacon shall be merged with
and into EOP, with EOP as the surviving real estate investment trust (the
"Surviving Trust").
1.2 The Partnership Merger. Upon the terms and subject to the
conditions of this Agreement, and in accordance with Title 6, Chapter 17 of the
Delaware Code Annotated, as amended (the "DRULPA"), immediately following the
consummation of the Merger, Beacon Partnership shall be merged with and into EOP
Partnership (or, at EOP Partnership's option, a limited liability company owned
entirely, directly and/or indirectly, by EOP Partnership, or a limited
partnership owned entirely, directly and/or indirectly, by EOP Partnership, as
determined by EOP and EOP Partnership), with EOP Partnership (or such limited
partnership or limited liability company subsidiary) as the surviving limited
partnership or limited liability company (the "Surviving Partnership"), and with
the holders of partnership interests in Beacon Partnership receiving in any
event units of partnership interest in EOP Partnership, as set forth in Sections
1.9 and 1.10(c).
1.3 Closing. The closing of the Mergers (the "Closing") will take
place at 10:00 a.m., local time on the date to be specified by the parties,
which (subject to satisfaction or waiver of the conditions set forth in Article
6) shall be no later than the third business day after satisfaction or waiver of
the conditions set forth in Section 6.1(a) (the "Closing Date"), at the offices
of Xxxxxxx, Procter & Xxxx XXX, Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
unless another date or place is agreed to in writing by the parties.
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1.4 Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article 6, EOP and Beacon
shall execute and file the Articles of Merger, executed in accordance with Title
8 and the MGCL, with the State Department of Assessments and Taxation of
Maryland (the "Department"), and shall execute and file the Certificate of
Merger, executed in accordance with the DRULPA, with the Office of the Secretary
of State of the State of Delaware (the "Secretary") and shall make all other
filings and recordings required, with respect to the Merger, under Title 8 and
the MGCL or, with respect to the Partnership Merger, under the DRULPA. The
Mergers shall become effective (the "Effective Time") at such times as EOP and
Beacon shall agree should be specified in the Articles of Merger and the
Certificate of Merger (not to exceed thirty (30) days after the Articles of
Merger are accepted for record by the Department). Unless otherwise agreed, the
parties shall cause the Effective Time to occur on the Closing Date.
1.5 Effect of Merger on Declaration of Trust and Bylaws. The
Articles of Amendment and Restatement of Declaration of Trust, as amended, of
EOP (the "EOP Declaration of Trust") and the Bylaws of EOP (the "EOP Bylaws"),
as in effect immediately prior to the Effective Time, shall continue in full
force and effect after the Merger until further amended in accordance with
applicable Maryland law.
1.6 Effect of Merger on Agreement of Limited Partnership. The
Agreement of Limited Partnership, as amended, of EOP Partnership, as in effect
immediately prior to the Effective Time (the "EOP Partnership Agreement"), shall
continue in full force and effect after the Merger until further amended in
accordance with applicable Delaware law.
1.7 Trustees. The trustees of the Surviving Trust shall consist of
the trustees of EOP immediately prior to the Effective Time, who shall continue
to serve for the balance of their unexpired terms or their earlier death,
resignation or removal, together with each of Xxxx X. Xxxxxxxxx and Xxxxx
Xxxxxx, who shall, on the third business day after the Effective Time, become
a trustee with a term expiring at the first annual meeting of shareholders of
EOP, and, in connection with such first annual meeting, EOP's Board of Trustees
shall cause these two members to be nominated for election to the Board of
Trustees with terms expiring in 1999 and 2001, respectively; provided, however,
that if notice with respect to the first annual meeting of shareholders of EOP
is mailed prior to the Effective Time, Xxxx X. Xxxxxxxxx and Xxxxx Xxxxxx shall
instead, on the first business day after the first annual meeting of
shareholders of EOP, become trustees with terms expiring at the annual meetings
of shareholders of EOP in 1999 and 2001, respectively. In connection with the
second annual meeting of shareholders of EOP, EOP's Board of Trustees shall
cause Xxxx X. Xxxxxxxxx to be nominated for re-election as a trustee to the
Board of Trustees with a term expiring at the annual meeting of shareholders of
EOP in 2002. Following their election as trustees, such persons shall serve
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for their designated terms, subject to their earlier death, resignation or
removal. In addition, in the event that EOP's current Chairman of the Board
ceases to be Chairman of the Board of EOP prior to the Effective Time, EOP's
Board of Trustees shall designate Xxxx X. Xxxxxxxxx as Chairman of the Board for
a term consisting of at least twelve consecutive months (subject to his
remaining a trustee throughout such period of twelve months).
1.8 Effect on Shares. The effect of the Merger on the shares of
capital stock of Beacon shall be as provided in the Articles of Merger. The
Merger shall not change the shares of beneficial interest of EOP outstanding
immediately prior to the Merger.
1.9 Effect on Partnership Interests. The effect of the Partnership
Merger on the partnership interests of Beacon Partnership shall be as provided
in the Certificate of Merger. The Partnership Merger shall not change the
partnership interests of EOP Partnership outstanding immediately prior to the
Merger.
1.10 Exchange Ratios.
(a) The exchange ratio to be set forth in the Articles of
Merger (the "Exchange Ratio") shall be 1.4063 of a common share of beneficial
interest, $0.01 par value per share, of EOP ("EOP Common Share") for each share
of common stock, $0.01 par value per share, of Beacon ("Beacon Common Share")
outstanding immediately prior to the Effective Time.
(b) The exchange ratio to be set forth in the Articles of
Merger (the "Preferred Exchange Ratio") shall be one 8.98% Series A Cumulative
Redeemable preferred share of beneficial interest, liquidation preference $25.00
per share, of EOP ("EOP Preferred Share" and, together with the EOP Common
Shares, the "Merger Consideration") for each share of 8.98% Series A Cumulative
Redeemable Preferred Stock, liquidation preference $25.00 per share, of Beacon
("Beacon Preferred Share") outstanding immediately prior to the Effective Time.
The holders of the EOP Preferred Shares issued in the Merger shall be entitled
to the same rights and privileges as the holders of the Beacon Preferred Shares
outstanding on the date hereof.
(c) The exchange ratio to be set forth in the Certificate of
Merger (the "Unit Exchange Ratio") shall be 1.4063 of a Class A Unit (as defined
in the EOP Partnership Agreement) of EOP Partnership ("EOP OP Unit"), for each
Partnership Unit (as defined in the Amended and Restated Agreement of Limited
Partnership of Beacon Partnership (the "Beacon Partnership Agreement")) other
than Series A Preferred Units (as defined in the Beacon Partnership Agreement)
("Beacon OP Unit") outstanding immediately prior to the Effective Time. The
holders of the EOP OP Units issued in the Partnership Merger shall be entitled
to redeem such EOP OP Units immediately following the consummation of the
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Partnership Merger (and thereafter) pursuant to the terms of the EOP Partnership
Agreement, and shall be entitled to the same rights and privileges as the
holders of EOP OP Units outstanding on the date hereof.
(d) The exchange ratio to be set forth in the Certificate of
Merger (the "Preferred Unit Exchange Ratio") shall be one 8.98% Series A
Preferred Unit of EOP Partnership ("EOP Preferred Unit") for each unit of 8.98%
Series A Preferred Unit of Beacon Partnership ("Beacon Preferred Unit")
outstanding immediately prior to the Effective Time. EOP, as the holder of the
EOP Preferred Units issued in the Partnership Merger, shall be entitled to the
same rights and privileges as Beacon, as the holder of the Beacon Preferred
Units outstanding on the date hereof.
1.11 Registration Rights Agreement. At the Effective Time, EOP will
assume in writing and succeed to all rights and obligations of Beacon pursuant
to the Registration Rights Agreements listed on Schedule 2.3 to the Beacon
Disclosure Letter.
1.12 Partner Approval. Beacon shall seek the requisite approval of
the partners of Beacon Partnership to the Partnership Merger to the extent
required by the Beacon Partnership Agreement and any other matters reasonably
requested by either party to effectuate the transactions contemplated by this
Agreement (collectively, the "Beacon Partner Approvals"). EOP shall seek the
requisite approval of the partners of EOP Partnership to the Partnership Merger
to the extent required by the EOP Partnership Agreement and any other matters
reasonably requested by either party to effectuate the transactions contemplated
by this Agreement (collectively, the "EOP Partner Approvals," and together with
the Beacon Partner Approvals, the "Partner Approvals").
1.13 No Appraisal Rights. The holders of Beacon Common Shares,
Beacon Preferred Shares, Beacon OP Units, EOP Shares, and EOP OP Units are not
entitled under applicable law to appraisal rights as a result of the Mergers.
1.14 Exchange of Certificates; Pre-Closing Dividends; Fractional
Shares.
(a) Exchange Agent. Prior to the Effective Time, EOP shall
appoint the exchange agent identified in Exhibit A, or another bank or trust
company reasonably acceptable to Beacon, to act as exchange agent (the "Exchange
Agent") for the exchange of the Merger Consideration upon surrender of
certificates representing issued and outstanding Beacon Common Shares or Beacon
Preferred Shares, as applicable.
(b) EOP to Provide Merger Consideration. EOP shall provide to
the Exchange Agent on or before the Effective Time, for the benefit of the
holders
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of Beacon Common Shares and Beacon Preferred Shares, EOP Common Shares
and EOP Preferred Shares (the "Exchange Fund") issuable in exchange for the
issued and outstanding Beacon Common Shares and Beacon Preferred Shares pursuant
to Section 1.10. Beacon shall provide to the Exchange Agent on or before the
Effective Time, for the benefit of the holders of Beacon Common Shares, cash
payable in respect of any dividends required pursuant to Section 1.14(d)(i) or
(ii).
(c) Exchange Procedure. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Beacon Common Shares and Beacon Preferred Shares (the
"Certificates") whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 1.10 (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in a form and have such other provisions as EOP may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by EOP, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration into which the Beacon Common Shares
or Beacon Preferred Shares, as applicable, theretofore represented by such
Certificate shall have been converted pursuant to Section 1.10, as well as any
dividends or other distributions to which such holder is entitled pursuant to
Section 1.14(d), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Beacon Common Shares or Beacon
Preferred Shares which is not registered in the transfer records of Beacon,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment either shall pay any transfer or other taxes required by reason of
such payment being made to a person other than the registered holder of such
Certificate or establish to the satisfaction of EOP that such tax or taxes have
been paid or are not applicable. Until surrendered as contemplated by this
Section 1.14, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration, without interest, into which the Beacon Common Shares or Beacon
Preferred Shares, as applicable, theretofore represented by such Certificate
shall have been converted pursuant to Section 1.10, and any dividends or other
distributions to which such holder is entitled pursuant to Section 1.14(d). No
interest will be paid or will accrue on the Merger Consideration upon the
surrender of any Certificate or on any cash payable pursuant to Section 1.14(d)
or Section 1.14(g).
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(d) Record Dates for Final Dividends; Distributions with
Respect to Unexchanged Shares.
(i) To the extent necessary to satisfy the requirements
of Section 857(a)(1) of the Code for the taxable year of Beacon ending at the
Effective Time (and avoid the payment of tax with respect to undistributed
income), Beacon shall declare a dividend (the "Final Company Dividend") to
holders of Beacon Common Shares, the record date for which shall be the close of
business on the last business day prior to the Effective Time, in an amount
equal to the minimum dividend sufficient to permit Beacon to satisfy such
requirements. If Beacon determines it necessary to declare the Final Company
Dividend, it shall notify EOP at least ten (10) days prior to the date for the
Beacon Shareholders Meeting (as defined in Section 5.1), and EOP shall declare a
dividend per share to holders of EOP Common Shares, the record date for which
shall be the close of business on the last business day prior to the Effective
Time, in an amount per EOP Common Share equal to the quotient obtained by
dividing (x) the Final Company Dividend per Beacon Common Share paid by Beacon
by (y) the Exchange Ratio. The dividends payable hereunder to holders of Beacon
Common Shares shall be paid upon presentation of the certificates of Beacon
Common Shares for exchange in accordance with this Section 1.14.
(ii) No dividends or other distributions with respect to
EOP Common Shares with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of EOP
Common Shares represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 1.14(g), in each
case until the surrender of such Certificate in accordance with this Section
1.14. Subject to the effect of applicable escheat laws, following surrender of
any such Certificate there shall be paid to the holder of such Certificate,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of any fractional EOP Common Shares to which such holder is
entitled pursuant to Section 1.14(g) and (ii) if such Certificate is
exchangeable for one or more whole EOP Common Shares, (x) at the time of such
surrender the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole EOP Common
Shares and (y) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with
respect to such whole EOP Common Shares.
(e) No Further Ownership Rights in Beacon Common Shares and
Beacon Preferred Shares. All Merger Consideration paid upon the surrender of
Certificates in accordance with the terms of this Section 1.14 (and any cash
paid pursuant to Section 1.14(g)) shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Beacon Common Shares or Beacon
Preferred Shares, as
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applicable, theretofore represented by such Certificates; provided, however,
that Beacon shall transfer to the Exchange Agent cash sufficient to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Beacon on such Beacon
Common Shares or Beacon Preferred Shares, as applicable, in accordance with the
terms of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time and have not been paid prior to such surrender, and
there shall be no further registration of transfers on the stock transfer books
of Beacon of the Beacon Common Shares and Beacon Preferred Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to EOP for any reason, they shall be canceled
and exchanged as provided in this Section 1.14.
(f) No Liability. None of Beacon, EOP or the Exchange Agent
shall be liable to any person in respect of any Merger Consideration or
dividends delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any portion of the Exchange Fund delivered to
the Exchange Agent pursuant to this Agreement that remains unclaimed for twelve
(12) months after the Effective Time shall be redelivered by the Exchange Agent
to EOP, upon demand, and any holders of Certificates who have not theretofore
complied with Section 1.14(c) shall thereafter look only to EOP for delivery of
the Merger Consideration and any unpaid dividends, subject to applicable escheat
and other similar laws.
(g) No Fractional Shares
(i) No certificates or scrip representing fractional EOP
Common Shares shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote,
to receive dividends or to any other rights of a shareholder of EOP.
(ii) No fractional EOP Common Shares shall be issued
pursuant to this Agreement. In lieu of the issuance of any fractional EOP Common
Shares pursuant to this Agreement, each holder of Beacon Common Shares upon
surrender of a Certificate for exchange shall be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying (i) the
average closing price of one EOP Common Share on the New York Stock Exchange
(the "NYSE") on the five trading days immediately preceding the Closing Date
(the "Fair Market Value") by (ii) the fractional amount of the EOP Common Shares
which such holder would otherwise be entitled to receive under this Section
1.14.
(h) Except for the provisions relating to the Exchange Agent,
certificates and the exchange procedure (which shall not be applicable), all
other provisions of this Section 1.14 shall apply to Beacon Partnership, EOP
Partnership and the Beacon OP Units with respect to the Partnership Merger.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BEACON
Except as set forth in the letter of even date herewith signed by
the President and Chief Executive Officer or the Executive Vice President and
Chief Operating Officer of Beacon and delivered to EOP prior to the execution
hereof (the "Beacon Disclosure Letter"), Beacon and Beacon Partnership
represent and warrant to EOP and EOP Partnership as follows:
2.1 Organization, Standing and Power of Beacon. Beacon is a
corporation duly organized, validly existing and in good standing under the laws
of Maryland. Beacon has all requisite corporate power and authority to own,
operate, lease and encumber its properties and carry on its business as now
being conducted. Beacon is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a material adverse effect on the business, properties, assets,
financial condition or results of operations of Beacon and the Beacon
Subsidiaries (as defined below), taken as a whole (an "Beacon Material Adverse
Effect"). Beacon has delivered to EOP complete and correct copies of Beacon's
Articles of Incorporation and Amended and Restated Bylaws, in each case, as
amended or supplemented to the date of this Agreement.
2.2 Beacon Subsidiaries.
(a) Schedule 2.2 to the Beacon Disclosure Letter sets forth (i)
each Subsidiary (as defined below) of Beacon (the "Beacon Subsidiaries"), (ii)
the ownership interest therein of Beacon, (iii) if not wholly owned by Beacon,
the identity and ownership interest of each of the other owners of such Beacon
Subsidiary, (iv) each office property and other commercial property owned by
such Subsidiary, and (v) if not wholly owned by such Subsidiary, the identity
and ownership interest of each of the other owners of such property. As used in
this Agreement, "Subsidiary" of any Person (as defined below) means any
corporation, partnership, limited liability company, joint venture, trust or
other legal entity of which such Person owns (either directly or through or
together with another Subsidiary of such Person) either (i) a general partner,
managing member or other similar interest, or (ii)(A) 10% or more of the voting
power of the voting capital stock or other equity interests, or (B) 10% or more
of the outstanding voting capital stock or other voting equity interests of such
corporation, partnership, limited liability company, joint venture or other
legal entity. As used herein, "Person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity. Schedule 2.4 sets forth a true and
complete list of the equity securities owned by Beacon, directly or indirectly,
in any corporation, partnership, limited liability company, joint venture or
other legal entity, excluding Beacon Subsidiaries.
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(b) Except as set forth in Schedule 2.2 to the Beacon Disclosure
Letter, (i) all of the outstanding shares of capital stock of each Beacon
Subsidiary that is a corporation have been duly authorized, validly issued and
are (A) fully paid and nonassessable and not subject to preemptive rights, (B)
owned by Beacon or by another Beacon Subsidiary and (C) owned free and clear of
all pledges, claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever (collectively, "Liens") and (ii) all equity interests
in each Beacon Subsidiary that is a partnership, joint venture, limited
liability company or trust which are owned by Beacon, by another Beacon
Subsidiary or by Beacon and another Beacon Subsidiary are owned free and clear
of all Liens. Each Beacon Subsidiary that is a corporation is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own,
operate, lease and encumber its properties and carry on its business as now
being conducted, and each Beacon Subsidiary that is a partnership, limited
liability company or trust is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own, operate, lease and encumber its properties
and carry on its business as now being conducted. Each Beacon Subsidiary is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Beacon Material Adverse
Effect. Complete and correct copies of the Articles of Incorporation, Bylaws,
organization documents and partnership, joint venture and operating agreements
of each Beacon Subsidiary, as amended to the date of this Agreement, have been
previously delivered or made available to EOP. No effective amendment has been
made to the Beacon Partnership Agreement since August 4, 1997.
2.3 Capital Structure.
(a) The authorized shares of capital stock of Beacon consist of
25,000,000 shares of preferred stock, $0.01 par value per share, 8,000,000 of
which are issued and outstanding on the date of this Agreement, 50,000,000
shares of excess stock, $0.01 par value per share, none of which are issued or
outstanding on the date of this Agreement, and 100,000,000 Beacon Common Shares,
55,599,850 of which were issued and outstanding as of September 12, 1997.
(b) Set forth in Schedule 2.3(b) to the Beacon Disclosure
Letter is a true and complete list of the following: (i) each qualified or
nonqualified option to purchase shares of Beacon's capital stock granted under
Beacon's Amended and Restated 1994 Stock Option and Incentive Plan and Beacon's
1996 Stock Option Plan or any other formal or informal arrangement
(collectively, the "Beacon Stock Options"); and (ii) all other warrants or
other rights to acquire shares of Beacon's capital stock, all limited stock
appreciation rights, phantom
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stock, dividend equivalents, performance units and performance shares which are
outstanding on the date of this Agreement. Schedule 2.3(b) to the Beacon
Disclosure Letter sets forth for each Beacon Stock Option the name of the
grantee, the date of the grant, status of the option as qualified or
nonqualified under Section 422 of the Code, the number and type of shares of
Beacon's capital stock subject to such option, the number and type of shares
subject to options that are currently exercisable, the exercise price per
share, and the number and type of such shares subject to share appreciation
rights. On the date of this Agreement, except as set forth in this Section 2.3
or in Schedule 2.3(b) to the Beacon Disclosure Letter, no shares of Beacon's
capital stock were outstanding or reserved for issuance.
(c) All outstanding shares of Beacon's capital stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of Beacon having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
Beacon may vote.
(d) Except (i) as set forth in this Section 2.3 or in Schedule
2.3(d) to the Beacon Disclosure Letter and (ii) Beacon OP Units, which may be
redeemed for cash or, at the option of Beacon, Beacon Common Shares, as of the
date of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Beacon or any Beacon Subsidiary is a party or by which such entity is
bound, obligating Beacon or any Beacon Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock,
voting securities or other ownership interests of Beacon or any Beacon
Subsidiary or obligating Beacon or any Beacon Subsidiary to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking (other than to Beacon or a Beacon
Subsidiary).
(e) As of the date of this Agreement, 70,943,301 Beacon OP Units
(including 8,000,000 8.98% Series A Preferred Units) are validly issued and
outstanding, fully paid and nonassessable and not subject to preemptive rights,
of which 63,599,850 are owned by Beacon. Schedule 2.3(e) to the Beacon
Disclosure Schedule sets forth the name of each holder of Beacon OP Units and
the number of Beacon OP Units owned by each such holder as of the date of this
Agreement. The Beacon OP Units are subject to no restrictions except as set
forth in the Beacon Partnership Agreement or in certain Lock-up Agreements
executed by certain holders of Beacon OP Units upon the issuance of such Beacon
OP Units. Except as provided in the Beacon Partnership Agreement, Beacon
Partnership has not issued or granted and is not a party to any outstanding
commitments of any kind relating
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to, or any presently effective agreements or understandings with respect to, the
issuance or sale of interests in Beacon Partnership, whether issued or unissued,
or securities convertible or exchangeable into interests in Beacon Partnership.
(f) All dividends on Beacon Common Shares and Beacon Preferred
Shares, and all distributions on Beacon OP Units (including Series A Preferred
Units), which have been declared prior to the date of this Agreement have been
paid in full, except that certain dividends payable on Beacon Preferred Shares
(along with the corresponding distributions payable on Series A Preferred Units)
which were declared on September 2, 1997 and are payable on September 15, 1997
have not yet been paid.
(g) Set forth on Schedule 2.3(g) to the Beacon Disclosure Letter
is a list of each Registration Rights Agreement pursuant to which Beacon is
obligated to register any securities.
2.4 Other Interests. Except for interests in the Beacon Subsidiaries
and certain other entities as set forth in Schedule 2.4 to the Beacon Disclosure
Letter (the "Beacon Other Interests"), neither Beacon nor any Beacon
Subsidiaries owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business, trust
or other entity (other than investments in short-term investment securities).
With respect to the Beacon Other Interests, Beacon or Beacon Partnership is a
partner or stockholder in good standing, and owns such interests free and clear
of all Liens. Neither Beacon nor any Beacon Subsidiary is in material breach of
any provision of any agreement, document or contract which is of a material
nature governing its rights in or to the Beacon Other Interests, all of which
agreements, documents and contracts are (a) set forth in the Beacon Disclosure
Letter, (b) unmodified except as described therein and (c) in full force and
effect. To the Knowledge of Beacon, the other parties to any such agreement,
document or contract which is of a material nature are not in material breach of
any of their respective obligations under such agreements, documents or
contracts.
2.5 Authority; Noncontravention; Consents.
(a) Beacon has the requisite corporate power and authority to
enter into this Agreement and, subject to the requisite shareholder approval of
the Merger (the "Beacon Shareholder Approvals"), to consummate the transactions
contemplated by this Agreement to which Beacon is a party. The execution and
delivery of this Agreement by Beacon and the consummation by Beacon of the
transactions contemplated by this Agreement to which Beacon is a party have been
duly authorized by all necessary action on the part of Beacon, except for and
subject to the Beacon Shareholder Approvals and the Beacon Partner Approvals.
This Agreement has been duly executed and delivered by Beacon and constitutes a
valid and binding obligation of Beacon, enforceable against Beacon in accordance
with
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and subject to its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
(b) Beacon Partnership has the requisite partnership power and
authority to enter into this Agreement and, subject to the requisite Beacon
Partner Approvals, to consummate the transactions contemplated by this Agreement
to which Beacon Partnership is a party. The execution and delivery of this
Agreement by Beacon Partnership and the consummation by Beacon Partnership of
the transactions contemplated by this Agreement to which Beacon Partnership is a
party have been duly authorized by all necessary action on the part of Beacon
Partnership, except for and subject to the Beacon Shareholder Approvals and the
Beacon Partner Approvals. This Agreement has been duly executed and delivered by
Beacon Partnership and constitutes a valid and binding obligation of Beacon
Partnership, enforceable against Beacon Partnership in accordance with and
subject to its terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general principles of
equity.
(c) Except as set forth in Schedule 2.5(c)(1) to the Beacon
Disclosure Letter, the execution and delivery of this Agreement by Beacon do
not, and the consummation of the transactions contemplated by this Agreement to
which Beacon is a party and compliance by Beacon with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any material obligation or
to material loss of a benefit under, or result in the creation of any Lien upon
any of the properties or assets of Beacon or any Beacon Subsidiary under, (i)
the Articles of Incorporation or the Amended and Restated Bylaws of Beacon or
the comparable charter or organizational documents or partnership, operating, or
similar agreement (as the case may be) of any Beacon Subsidiary, each as amended
or supplemented, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, franchise or license applicable to Beacon or any Beacon
Subsidiary or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
(collectively, "Laws") applicable to Beacon or any Beacon Subsidiary, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, loss or Liens that
individually or in the aggregate would not (x) have a Beacon Material Adverse
Effect or (y) prevent the consummation of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is required
by or with respect to Beacon or any Beacon Subsidiary in connection with the
execution and delivery of this Agreement by
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Beacon or the consummation by Beacon of the transactions contemplated by this
Agreement, except for (i) the filing with the Securities and Exchange Commission
(the "SEC") of the Proxy Statement (as defined in Section 5.1), (ii) the
acceptance for record of the Articles of Merger by the Department, (iii) the
filing of the Certificate of Merger with the Secretary and (iv) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings (A) as are set forth in Schedule 2.5(c)(2) to the Beacon Disclosure
Letter, (B) as may be required under (x) laws requiring transfer, recordation or
gains tax filings, (y) federal, state or local environmental laws or (z) the
"blue sky" laws of various states, to the extent applicable or (C) which, if not
obtained or made, would not prevent or delay in any material respect the
consummation of any of the transactions contemplated by this Agreement or
otherwise prevent Beacon from performing its obligations under this Agreement in
any material respect or have, individually or in the aggregate, a Beacon
Material Adverse Effect.
2.6 SEC Documents; Financial Statements; Undisclosed Liabilities.
Beacon and Beacon Partnership have filed all required reports, schedules, forms,
statements and other documents with the SEC since May 26, 1994 and April 9, 1997
respectively, through the date hereof (the "Beacon SEC Documents"). Schedule
2.6(a) to the Beacon Disclosure Letter contains a complete list of all Beacon
SEC Documents filed by Beacon or Beacon Partnership with the SEC since January
1, 1997 and on or prior to the date of this Agreement. All of the Beacon SEC
Documents (other than preliminary material), as of their respective filing
dates, complied in all material respects with all applicable requirements of the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in each case, the rules and regulations promulgated
thereunder applicable to such Beacon SEC Documents. None of the Beacon SEC
Documents at the time of filing contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent such statements
have been modified or superseded by later Beacon SEC Documents filed and
publicly available prior to the date of this Agreement. The consolidated
financial statements of Beacon included in the Beacon SEC Documents or of Beacon
Partnership included in the Beacon SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by the applicable rules and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented,
in accordance with the applicable requirements of GAAP and the applicable rules
and regulations of the SEC, the consolidated financial position of Beacon and
its Subsidiaries or Beacon Partnership and its Subsidiaries, as the case may be,
in each case taken as a whole, as of the dates
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thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in Schedule 2.6(b) to the
Beacon Disclosure Letter, Beacon has no Subsidiaries which are not consolidated
for accounting purposes. Except for liabilities and obligations set forth in the
Beacon SEC Documents or in Schedule 2.6(c) to the Beacon Disclosure Letter,
neither Beacon nor any of the Beacon Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of Beacon or in
the notes thereto and which, individually or in the aggregate, would have a
Beacon Material Adverse Effect.
2.7 Absence of Certain Changes or Events. Except as disclosed in the
Beacon SEC Documents or in Schedule 2.7 to the Beacon Disclosure Letter, since
the date of the most recent audited financial statements included in Beacon SEC
Documents (the "Beacon Financial Statement Date"), Beacon and its Subsidiaries
have conducted their business only in the ordinary course (taking into account
prior practices, including the acquisition of properties and issuance of
securities) and there has not been (a) any material adverse change in the
business, financial condition or results of operations of Beacon and its
Subsidiaries taken as a whole (a "Beacon Material Adverse Change"), nor has
there been any occurrence or circumstance that with the passage of time would
reasonably be expected to result in a Beacon Material Adverse Change, (b) except
for regular quarterly distributions not in excess of $.56 per Beacon Preferred
Share or Beacon Preferred Unit or $.50 per Beacon Common Share or Beacon OP Unit
(other than Beacon Preferred Units), respectively (or, with respect to the
period commencing on the date hereof and ending on the Closing Date,
distributions as necessary to maintain REIT status), in each case with customary
record and payment dates, any authorization, declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the Beacon Common Shares, Beacon Preferred Shares or
Beacon OP Units, (c) any split, combination or reclassification of the Beacon
Common Shares or the Beacon OP Units or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for, or giving the right to acquire by exchange or exercise, shares of stock of
Beacon or partnership interests in Beacon Partnership or any issuance of an
ownership interest in, any Beacon Subsidiary, (d) any damage, destruction or
loss, whether or not covered by insurance, that has or would have a Beacon
Material Adverse Effect, (e) any change in accounting methods, principles or
practices by Beacon or any Beacon Subsidiary materially affecting its assets,
liabilities or business, except insofar as may have been disclosed in Beacon SEC
Documents or required by a change in GAAP, or (f) any amendment of any
employment, consulting, severance, retention or any other agreement between
Beacon and any officer or director of Beacon.
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2.8 Litigation. Except as disclosed in the Beacon SEC Documents or
in Schedule 2.8 to the Beacon Disclosure Letter, and other than personal injury
and other routine tort litigation arising from the ordinary course of operations
of Beacon and its Subsidiaries (a) which are covered by adequate insurance or
(b) for which all material costs and liabilities arising therefrom are
reimbursable pursuant to common area maintenance or similar agreements, there is
no suit, action or proceeding pending (in which service of process has been
received by an employee of Beacon or a Beacon Subsidiary) or, to the Knowledge
of Beacon (as hereinafter defined), threatened in writing against or affecting
Beacon or any Beacon Subsidiary that, individually or in the aggregate, could
reasonably be expected to (i) have a Beacon Material Adverse Effect or (ii)
prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
court or Governmental Entity or arbitrator outstanding against Beacon or any of
its Subsidiaries having, or which, insofar as reasonably can be foreseen, in the
future would have, any such effect. Notwithstanding the foregoing, (y) Schedule
2.8 to the Beacon Disclosure Letter sets forth each and every material uninsured
claim, equal employment opportunity claim and claim relating to sexual
harassment and/or discrimination pending or, to the Knowledge of Beacon,
threatened as of the date hereof, in each case with a brief summary of such
claim or threatened claim and (z) no claim has been made under any directors'
and officers' liability insurance policy maintained at any time by Beacon or any
of the Beacon Subsidiaries; provided, however, that if Beacon or Beacon
Partnership has prepared Schedule 2.8 to the Beacon Disclosure Letter in good
faith, EOP hereby covenants not to exercise any right that it may have to
terminate this Agreement pursuant to Section 7.1(b), based solely on any breach
of representation of Beacon and Beacon Partnership contained in this sentence;
provided further, however, that nothing contained in this Section 2.8 shall
affect EOP's right to terminate this Agreement pursuant to Section 7.1(b) with
respect to any other matter described in clause (x) or (y) above that occurs or
arises after the date hereof.
2.9 Properties.
(a) Except as provided in Schedule 2.2 or Schedule 2.9(a) to the
Beacon Disclosure Letter, Beacon or the Beacon Subsidiary set forth on Schedule
2.2 to the Beacon Disclosure Letter owns fee simple title to each of the real
properties identified in Schedule 2.2 to the Beacon Disclosure Letter (the
"Beacon Properties"), which are all of the real estate properties owned by them,
in each case (except as provided below) free and clear of liens, mortgages or
deeds of trust, claims against title, charges which are liens, security
interests or other
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encumbrances on title ("Encumbrances"). Except as set forth in Schedule 2.2 to
the Beacon Disclosure Letter, no other Person has any ownership interest in any
of the Beacon Properties, and any such ownership interest so scheduled does not
materially detract from the value of the Beacon Subsidiary's interest in, or
materially interfere with the present use of, any of the Beacon Properties
subject thereto or affected thereby. Except as set forth in Schedule 2.9(a) to
the Beacon Disclosure Letter, none of the Beacon Properties is subject to any
restriction on the sale or other disposition thereof or on the financing or
release of financing thereon. The Beacon Properties are not subject to any
rights of way, written agreements, laws, ordinances and regulations affecting
building use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions") or Encumbrances, except for (i) Property
Restrictions and Encumbrances set forth in the Beacon Disclosure Letter, (ii)
Property Restrictions imposed or promulgated by law or any governmental body or
authority with respect to real property, including zoning regulations, which do
not materially adversely affect the current use of any Beacon Property, (iii)
Property Restrictions and Encumbrances disclosed on existing title reports or
existing surveys or subsequently granted by Beacon or the Beacon Subsidiary,
which Property Restrictions and Encumbrances, in any event, do not materially
detract from the value of, or materially interfere with the present use of, any
of the Beacon Properties subject thereto or affected thereby and (iv) liens for
real estate taxes not yet due and payable, mechanics', carriers', workmen's,
repairmen's liens and other Encumbrances and Property Restrictions, if any,
which, individually or in the aggregate, do not materially detract from the
value of or materially interfere with the present use of any of the Beacon
Property subject thereto or affected thereby. Schedule 2.9(a) to the Beacon
Disclosure Letter lists each of the Beacon Properties which are under
development as of the date of this Agreement and describes the status of such
development as of the date hereof.
(b) Except as provided in Schedule 2.2 or Schedule 2.9(b) to the
Beacon Disclosure Letter, valid policies of title insurance have been issued
insuring the applicable Beacon Subsidiary's fee simple title or leasehold
estate, as the case may be, to the Beacon Properties owned by it in amounts at
least equal to the purchase price therefor paid by such Beacon Subsidiary,
subject only to the matters disclosed above and in the Beacon Disclosure Letter.
Such policies are, at the date hereof, in full force and effect. No claim has
been made against any such policy.
(c) Except as provided in Schedule 2.9(c) to the Beacon
Disclosure Letter, Beacon has no Knowledge (i) that, any certificate, permit or
license from any governmental authority having jurisdiction over any of the
Beacon Properties or any agreement, easement or other right which is necessary
to permit the lawful use and operation of the buildings and improvements on any
of the Beacon Properties or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to and
from any of the
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Beacon Properties has not been obtained and is not in full force
and effect, or of any pending threat of modification or cancellation of any of
same which would have a material adverse effect on such Beacon Property, (ii) of
any written notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement materially and adversely affecting
any of the Beacon Properties issued by any governmental authority, (iii) of any
structural defects relating to any Beacon Property which would have a material
adverse effect on such Beacon Property, (iv) of any Beacon Property whose
building systems are not in working order so as to have a material adverse
effect on such Beacon Property, or (v) of any physical damage to any Beacon
Property which would have a material adverse effect on such Beacon Property for
which there is no insurance in effect covering the cost of the restoration.
(d) Neither Beacon nor any Beacon Subsidiary has received any
written or published notice to the effect that (i) any condemnation or rezoning
proceedings are pending or threatened with respect to any of the Beacon
Properties or (ii) any zoning, building or similar law, code, ordinance, order
or regulation is or will be violated by the continued maintenance, operation or
use of any buildings or other improvements on any of the Beacon Properties or by
the continued maintenance, operation or use of the parking areas. Except as set
forth in Schedule 2.9(d) to the Beacon Disclosure Letter, all work required to
be performed, payments required to be made and actions required to be taken
other than those which would not have a material adverse effect on any of Beacon
or the Beacon Subsidiaries prior to the date hereof pursuant to any agreement
entered into with a governmental body or authority in connection with a site
approval, zoning reclassification or other similar action relating to any Beacon
Properties (e.g., Local Improvement District, Road Improvement District,
Environmental Mitigation) have been performed, paid or taken, as the case may
be, and Beacon has no Knowledge of any planned or proposed work, payments or
actions that may be required after the date hereof pursuant to such agreements,
except as set forth in development or operating budgets for such Beacon
Properties delivered to EOP and EOP Partnership prior to the date hereof.
(e) The rent roll previously provided by Beacon to EOP (the
"Beacon Rent Roll") lists each Beacon Space Lease (as defined below) in effect
as of April 1, 1997. "Beacon Space Lease" means each lease or other right of
occupancy affecting or relating to a property in which Beacon Partnership (or an
entity in which it directly or indirectly has an interest) is the landlord,
either pursuant to the terms of the lease agreement or as successor to any prior
landlord, but excluding any ground lease. Beacon has made available to EOP true,
correct and complete copies of all Beacon Space Leases, including all
amendments, modifications, supplements, renewals, extensions and guarantees
related thereto, as of the date hereof. Except for discrepancies that, either
individually or in the aggregate, would not reasonably be expected to have a
Beacon Material Adverse Effect, all
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information set forth in the Beacon Rent Roll is true, correct and complete as
of the date thereof. Except as set forth in a delinquency report made available
to EOP, neither Beacon or any Beacon Subsidiary, on the one hand, nor, to the
knowledge of Beacon or Beacon Partnership, any other party, on the other hand,
is in monetary default under any Beacon Space Lease, except for such defaults
that would not reasonably be expected to have a Beacon Material Adverse Effect.
2.10 Environmental Matters. Except as disclosed in the Beacon
SEC Documents, (a) none of Beacon, any of the Beacon Subsidiaries or, to
Beacon's Knowledge, any other Person has caused or permitted the unlawful
presence of any hazardous substances, hazardous materials, toxic substances or
waste materials (collectively, "Hazardous Materials") on or under any of the
Beacon Properties and none of Beacon nor any of the Beacon Subsidiaries has any
knowledge of the presence of any Hazardous Materials on or under any of the
Beacon Properties or (b) none of Beacon, any of the Beacon Subsidiaries, or to
Beacon's Knowledge, any other Person, has caused or permitted any unlawful
spills, releases, discharges or disposal of Hazardous Materials to have occurred
or be presently occurring on or from the Beacon Properties as a result of any
construction on or operation and use of such properties and none of Beacon nor
any of the Beacon Subsidiaries has any knowledge of any spills, releases,
discharges or disposal of Hazardous Materials to have occurred or be presently
occurring on, under or from the Beacon Properties as a result of any
construction on or operation and use of such properties, in each of the
foregoing cases, which presence or occurrence would, individually or in the
aggregate, have a Beacon Material Adverse Effect; and in connection with the
construction on or operation and use of the Beacon Properties, Beacon and the
Beacon Subsidiaries have not failed to comply in any material respect with all
applicable local, state and federal environmental laws, regulations, ordinances
and administrative and judicial orders relating to the generation, recycling,
reuse, sale, storage, handling, transport and disposal of any Hazardous
Materials, except to the extent such failure to comply, individually or in the
aggregate, would not have a Beacon Material Adverse Effect. Beacon has
previously delivered or made available to EOP complete copies of all final
versions of environmental investigations and testing or analysis made by or on
behalf of Beacon or any of the Beacon Subsidiaries that are in the possession of
any of them with respect to the environmental condition of the Beacon
Properties.
2.11 Related Party Transactions. Set forth in Schedule 2.11 to
the Beacon Disclosure Letter is a list of all material arrangements, agreements
and contracts entered into by Beacon or any of the Beacon Subsidiaries with (a)
any investment banker or financial advisor, (b) any person who is an officer,
director or Affiliate (as defined below) of Beacon or any of its Subsidiaries,
any relative of any of the foregoing or any entity of which any of the foregoing
is an Affiliate or (c) any person who acquired Beacon Common Shares or Beacon OP
Units in a private placement. Such documents, copies of all of which have
previously been delivered
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or made available to EOP, are listed in Schedule 2.11 to the Beacon Disclosure
Letter. As used in this Agreement, the term "Affiliate" shall have the same
meaning as such term is defined in Rule 405 promulgated under the Securities
Act.
2.12 Employee Benefits. As used herein, the term "Employee Plan"
includes any pension, retirement, savings, disability, medical, dental, health,
life, death benefit, group insurance, profit sharing, deferred compensation,
stock option, bonus, incentive, vacation pay, tuition reimbursement, severance
pay, or other employee benefit plan, trust, agreement, contract, agreement,
policy or commitment (including, without limitation, any pension plan, as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder ("ERISA")
("Pension Plan"), and any welfare plan as defined in Section 3(1) of ERISA
("Welfare Plan")), whether any of the foregoing is funded, insured or
self-funded, written or oral, (i) sponsored or maintained by Beacon or its
Subsidiaries (each a "Controlled Group Member") and covering any Controlled
Group Member's active or former employees (or their beneficiaries), (ii) to
which any Controlled Group Member is a party or by which any Controlled Group
Member (or any of the rights, properties or assets thereof) is bound or (iii)
with respect to which any current Controlled Group Member may otherwise have any
material liability (whether or not such Controlled Group Member still maintains
such Employee Plan). Each Employee Plan is listed on Schedule 2.12 to the Beacon
Disclosure Letter. With respect to the Employee Plans:
(a) Except as proposed in Schedule 2.12(a) to the Beacon
Disclosure Letter, no Controlled Group Member has any continuing liability
under any Welfare Plan which provides for continuing benefits or coverage for
any participant or any beneficiary of a participant after such participant's
termination of employment, except as may be required by Section 4980B of the
Code or Section 601 (et seq.) of ERISA, or under any applicable state law, and
at the expense of the participant or the beneficiary of the participant.
(b) Each Employee Plan complies in all material respects with
the applicable requirements of ERISA and any other applicable law governing such
Employee Plan, and, to the best Knowledge of Beacon, each Employee Plan has at
all times been properly administered in all material respects in accordance with
all such requirements of law, and in accordance with its terms and the terms of
any applicable collective bargaining agreement to the extent consistent with all
such requirements of law. Each Pension Plan which is intended to be qualified is
qualified under Section 401(a) of the Code, has received a favorable
determination letter from the IRS stating that such Plan meets the requirements
of Section 401(a) of the Code and that the trust associated with such Plan is
tax-exempt under Section 501(a) of the Code and, to the best Knowledge of
Beacon, no event has occurred which would jeopardize the qualified status of any
such plan or the tax exempt status of any such trust under Sections 401(a) and
Section 501(a) of the
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Code, respectively. No lawsuits, claims (other than routine claims for
benefits) or complaints to, or by, any person or governmental entity have been
filed, are pending, to the best Knowledge of Beacon, threatened with respect to
any Employee Plan and, to the best Knowledge of Beacon, there is no fact or
contemplated event which would be expected to give rise to any such lawsuit,
claim (other than routine claims for benefits) or complaint with respect to any
Pension Plan. Without limiting the foregoing, the following are true with
respect to each Employee Plan:
(i) all Controlled Group Members have complied in all
material respects with the reporting and disclosure requirements of
ERISA, the Code, or both, with respect to each Employee Plan and no
Controlled Group Member has incurred any material liability in
connection with such reporting or disclosure;
(ii) all contributions and payments with respect to Employee
Plans that are required to be made by a Controlled Group Member with
respect to periods ending on or before the Closing Date (including
periods from the first day of the current plan or policy year to the
Closing Date) have been, or will be, made or accrued before the
Closing Date in accordance with the appropriate plan document,
actuarial report, collective bargaining agreements or insurance
contracts or arrangements or as otherwise required by ERISA or the
Code; and
(iii) with respect to each such Employee Plan, to the extent
applicable, Beacon has delivered to or has made available to EOP true
and complete copies of (A) plan documents, or any and all other
documents that establish the existence of the plan, trust,
arrangement, contract, policy or commitment and all amendments
thereto, (B) the most recent determination letter, if any, received
from the IRS, (C) the three most recent Form 5500 Annual Reports (and
all schedules and reports relating thereto) and actuarial reports and
(D) all related trust agreements, insurance contract or other funding
agreements that implement each such Employee Plan.
(c) With respect to each Employee Plan, to the best Knowledge
of Beacon, there has not occurred, and no person or entity is contractually
bound to enter into, any "prohibited transaction" within the meaning of Section
4975(c) of the Code or Section 406 of ERISA, which transaction is not exempt
under Section 4975(d) of the Code or Section 408 of ERISA and which could
subject Beacon or any Controlled Group Member to material liability.
(d) Except as disclosed in Schedule 2.12(d) to the Beacon
Disclosure Letter, no Controlled Group Member has maintained or been obligated
to contribute to any Employee Plan subject to Code Section 412 or Title IV of
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ERISA. No Employee Plan subject to Code Section 412 or Title IV of ERISA has
been terminated.
(e) With respect to each pension plan maintained by any
Controlled Group Member, such Plans provide the Plan Sponsor the authority to
amend or terminate the Plan at any time, subject to applicable requirements of
ERISA and the Code.
2.13 Employee Policies. No employee handbook of Beacon or any of the
Beacon Subsidiaries is currently in effect. Schedule 2.13 to the Beacon
Disclosure Letter fairly and accurately summarizes all material employee
policies, vacation policies and payroll policies.
2.14 Taxes.
(a) Each of Beacon and the Beacon Subsidiaries (A) has filed all
Tax returns and reports required to be filed by it (after giving effect to any
filing extension properly granted by a Governmental Entity having authority to
do so) and all such returns and reports are accurate and complete in all
material respects, and (B) has paid (or Beacon has paid on its behalf) all Taxes
(as defined below) shown on such returns and reports as required to be paid by
it, except those where the failure to file such tax returns and reports or pay
such Taxes would not have a Beacon Material Adverse Effect. The most recent
audited financial statements contained in the Beacon SEC Documents reflect an
adequate reserve for all material Taxes payable by Beacon and the Beacon
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements. Since the Beacon Financial Statement Date, Beacon has
incurred no liability for taxes under Sections 857(b), 860(c) or 4981 of the
Code, including without limitation any tax arising from a prohibited transaction
described in Section 857(b)(6) of the Code, and neither Beacon nor any Beacon
Subsidiary has incurred any material liability for taxes other than in the
ordinary course of business. No event has occurred, and no condition or
circumstance exists, which presents a material risk that any material Tax
described in the preceding sentence will be imposed upon Beacon. To the
Knowledge of Beacon, no deficiencies for any Taxes have been proposed, asserted
or assessed against Beacon or any of the Beacon Subsidiaries, and no requests
for waivers of the time to assess any such Taxes are pending. As used in this
Agreement, "Taxes" shall include all federal, state, local and foreign income,
property, sales, franchise, employment, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, together with penalties, interest
or additions to Tax with respect thereto.
(b) Beacon and BeaMetFed, Inc. ("BeaMet") (i) for all taxable
years commencing with 1994 (or, in the case of BeaMet, 1995) through December
31, 1996 has been subject to taxation as a real estate investment trust (a
"REIT") within the meaning of Section 856 of the Code and has satisfied all
requirements to
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qualify as a REIT for such years, (ii) has operated since December 31, 1996 to
the date of this representation, and intends to continue to operate, in such a
manner as to qualify as a REIT for the taxable year ending December 31, 1997 and
for the taxable year of Beacon ending on the Closing Date (or, in the case of
BeaMet, on December 31, 1998), and (iii) has not taken or omitted to take any
action which would reasonably be expected to result in a challenge to its status
as a REIT and, to Beacon's Knowledge, no such challenge is pending or
threatened. Each Beacon Subsidiary which is a partnership, joint venture or
limited liability company (i) has been since its formation and continues to be
treated for federal income tax purposes as a partnership and not as a
corporation or an association taxable as a corporation and (ii) has not since
the later of its formation or the acquisition by Beacon of a direct or indirect
interest therein, owned any assets (including, without limitation, securities)
that would cause Beacon to violate Section 856(c)(5) of the Code. No Beacon
Subsidiary (other than BeaMet, the Management Company, the Design Company and
the Construction Company) is a corporation (or an entity that would, under
applicable federal income tax principles, be classified as an association
taxable as a corporation). Beacon Partnership is not a publicly traded
partnership within the meaning of Section 7704 of the Code. Neither Beacon nor
any Beacon Subsidiary holds any asset (x) the disposition of which would be
subject to rules similar to Section 1374 of the Code as a result of a notice
under IRS Notice 88-19 or (y) which is subject to a consent filed pursuant to
Section 341(f) of the Code and the regulations thereunder.
2.15 No Payments to Employees, Officers or Directors. Schedule 2.15
to the Beacon Disclosure Letter contains a true and complete list of all
arrangements, agreements or plans pursuant to which cash and non-cash payments
which will become payable (and the maximum aggregate amount which may be payable
thereunder) to each employee, officer or director of Beacon or any Beacon
Subsidiary as a result of the Merger or a termination of service subsequent to
the consummation of the Merger. Except as described in Schedule 2.15 to the
Beacon Disclosure Letter, or as otherwise provided for in this Agreement, there
is no employment or severance contract, or other agreement requiring payments,
cancellation of indebtedness or other obligation to be made on a change of
control or otherwise as a result of the consummation of any of the transactions
contemplated by this Agreement or as a result of a termination of service
subsequent to the consummation of any of the transactions contemplated by this
Agreement, with respect to any employee, officer or director of Beacon or any
Beacon Subsidiary.
2.16 Broker; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Xxxxxx Xxxxxxx & Co.,
Incorporated, the fees and expenses of which are described in the engagement
letter dated September 12, 1997, between Xxxxxx Xxxxxxx & Co., Incorporated and
Beacon, a true, correct and complete copy of which has previously been given to
EOP, is entitled to any broker's, finder's, financial advisor's or other similar
fee or
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commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of Beacon or any Beacon Subsidiary.
2.17 Compliance with Laws. Neither Beacon nor any of the Beacon
Subsidiaries has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business, properties or operations, except to the extent that
such violation or failure would not have a Beacon Material Adverse Effect.
2.18 Contracts; Debt Instruments.
(a) Neither Beacon nor any Beacon Subsidiary has received a
written notice that Beacon or any Beacon Subsidiary is in violation of or in
default under (nor to the Knowledge of Beacon does there exist any condition
which upon the passage of time or the giving of notice or both would cause such
a violation of or default under) any material loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license or any
other material contract, agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound, nor to the
Knowledge of Beacon does such a violation or default exist, except to the extent
that such violation or default, individually or in the aggregate, would not have
a Beacon Material Adverse Effect.
(b) Except for any of the following expressly identified in
Beacon SEC Documents, Schedule 2.18(b) to the Beacon Disclosure Letter sets
forth a list of each material loan or credit agreement, note, bond, mortgage,
indenture and any other agreement or instrument pursuant to which any
Indebtedness (as defined below) of Beacon or any of the Beacon Subsidiaries,
other than Indebtedness payable to Beacon or a Beacon Subsidiary is outstanding
or may be incurred. For purposes of this Section 2.18, "Indebtedness" shall mean
(i) indebtedness for borrowed money, whether secured or unsecured, (ii)
obligations under conditional sale or other title retention agreements relating
to property purchased by such person, (iii) capitalized lease obligations, (iv)
obligations under interest rate cap, swap, collar or similar transaction or
currency hedging transactions (valued at the termination value thereof) and (v)
guarantees of any such indebtedness of any other person.
(c) To the extent not set forth in response to the requirements
of Section 2.18(b), Schedule 2.18(c) to the Beacon Disclosure Letter sets forth
each interest rate cap, interest rate collar, interest rate swap, currency
hedging transaction, and any other agreement relating to a similar transaction
to which Beacon or any Beacon Subsidiary is a party or an obligor with respect
thereto.
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(d) Except as set forth in Schedule 2.18(d) of the Beacon
Disclosure Letter, neither Beacon nor any of the Beacon Subsidiaries is a party
to any agreement which would restrict any of them from prepaying any of their
Indebtedness without penalty or premium at any time or which requires any of
them to maintain any amount of Indebtedness with respect to any of the Beacon
Properties.
(e) Neither Beacon nor any Beacon Subsidiary is a party to any
agreement relating to the management of any Beacon Property by any Person other
than the Management Company, Beacon Management L.P. and Beacon Properties South
Station Management Company, L.P.
(f) Neither Beacon nor any of the Beacon Subsidiaries is a party
to any agreement pursuant to which Beacon or any Beacon Subsidiary manages or
provides services with respect to any real properties other than Beacon
Properties, except for the agreements described in Schedule 2.18(f) to the
Beacon Disclosure Letter (the "Outside Property Management Agreements").
(g) Beacon has delivered to EOP prior to the date of this
Agreement a true and complete capital budget relating to budgeted construction.
Schedule 2.18(g) to the Beacon Disclosure Letter lists all material agreements
entered into by Beacon or any of the Beacon Subsidiaries relating to the
development or construction of, or additions or expansions to, any Beacon Real
Properties (or any properties with respect to which Beacon has executed as of
the date of this Agreement a purchase agreement or other similar agreement)
which are currently in effect and under which Beacon or any of the Beacon
Subsidiaries currently has, or expects to incur, an obligation in excess of
$250,000. True, correct and complete copies of such agreements have previously
been delivered or made available to EOP.
(h) Schedule 2.18(h) to the Beacon Disclosure Letter lists all
agreements entered into by Beacon or any Beacon Subsidiary providing for the
sale of, or option to sell, any Beacon Properties or the purchase of, or option
to purchase, by Beacon or any Beacon Subsidiary, on the one hand, or the other
party thereto, on the other hand, any real estate which are currently in effect.
(i) Except as set forth in Schedule 2.18(i) to the Beacon
Disclosure Letter, neither Beacon nor any Beacon Subsidiary has any material
continuing contractual liability (A) for indemnification or otherwise under any
agreement relating to the sale of real estate previously owned, whether directly
or indirectly, by Beacon or any Beacon Subsidiary or (B) to pay any additional
purchase price for any of the Beacon Properties.
(j) Except as set forth in Schedule 2.18(j) to the Beacon
Disclosure Letter, neither Beacon nor any Beacon Subsidiary has entered into or
is
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subject, directly or indirectly, to any "Tax Protection Agreements." As used
herein, a Tax Protection Agreement is an agreement, oral or written, (A) that
has as one of its purposes to permit a person or entity to take the position
that such person or entity could defer federal taxable income that otherwise
might have been recognized upon a transfer of property to the Beacon Partnership
or any other Beacon Subsidiary that is treated as a partnership for federal
income tax purposes, and (B) that (i) prohibits or restricts in any manner the
disposition of any assets of Beacon or any Beacon Subsidiary, (ii) requires that
Beacon or any Beacon Subsidiary maintain, or put in place, or replace,
indebtedness, whether or not secured by one or more of the Beacon Properties, or
(iii) requires that Beacon or any Beacon Subsidiary offer to any person or
entity at any time the opportunity to guarantee or otherwise assume, directly or
indirectly, the risk of loss for federal income tax purposes for indebtedness or
other liabilities of Beacon or any Beacon Subsidiary.
2.19 Opinion of Financial Advisor. Beacon has received the oral
opinion of Xxxxxx Xxxxxxx & Co., Incorporated or an affiliate thereof,
satisfactory to Beacon, to the effect that the proposed consideration to be
received by the holders of Beacon Common Shares pursuant to the Merger is fair
to such holders from a financial point of view.
2.20 State Takeover Statutes. Beacon has taken all action necessary
to exempt the transactions contemplated by this Agreement between EOP and Beacon
and its Affiliates from the operation of any "fair price," "moratorium,"
"control share acquisition" or any other anti-takeover statute or similar
statute enacted under the state or federal laws of the United States or similar
statute or regulation (a "Takeover Statute").
2.21 Investment Company Act of 1940. Neither Beacon nor any of the
Beacon Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
2.22 Definition of Knowledge of Beacon. As used in this Agreement,
the phrase "Knowledge of Beacon" (or words of similar import) means the
knowledge of those individuals identified in Schedule 2.22 to the Beacon
Disclosure Letter.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EOP
Except as set forth in the letter of even date herewith signed by the
President or an Executive Vice President of EOP and delivered to Beacon prior to
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the execution hereof (the "EOP Disclosure Letter"), EOP and EOP Partnership
represent and warrant to Beacon and Beacon Partnership as follows:
3.1 Organization, Standing and Power of EOP. EOP is a real estate
investment trust duly organized, validly existing and in good standing under the
laws of Maryland and has all requisite power and authority to own, operate,
lease and encumber its properties and carry on its business as now being
conducted. EOP is duly qualified or licensed to do business as a foreign trust
and is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed, individually or in the aggregate, would not have a
material adverse effect on the business, properties, assets, financial condition
or results of operations of EOP and the Subsidiaries of EOP (collectively, "EOP
Subsidiaries"), taken as a whole (an "EOP Material Adverse Effect"). EOP has
delivered to Beacon complete and correct copies of the EOP Declaration of Trust
and the EOP Bylaws, as amended or supplemented to the date of this Agreement.
3.2 EOP Subsidiaries.
(a) Schedule 3.2(a) to the EOP Disclosure Letter sets forth (i)
each EOP Subsidiary, (ii) the ownership interest therein of EOP, (iii) if not
wholly owned by EOP, the identity and ownership interest of each of the other
owners of such EOP Subsidiary, (iv) each office property and other commercial
property owned by such Subsidiary, and (v) if not wholly owned by such
Subsidiary, the identity and ownership interest of each of the other owners of
such property.
(b) Except as set forth in Schedule 3.2(b) to the EOP Disclosure
Letter, (i) all the outstanding shares of capital stock of each EOP Subsidiary
that is a corporation have been duly authorized, validly issued and are (A)
fully paid and nonassessable and not subject to preemptive rights, (B) owned by
EOP or by another EOP Subsidiary and (C) owned free and clear of all Liens and
(ii) all equity interests in each EOP Subsidiary that is a partnership, joint
venture, limited liability company or trust which are owned by EOP, by another
EOP Subsidiary or by EOP and another EOP Subsidiary are owned free and clear of
all Liens. Each EOP Subsidiary that is a corporation is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own,
operate, lease and encumber its properties and carry on its business as now
being conducted, and each EOP Subsidiary that is a partnership, limited
liability company or trust is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own, operate, lease and encumber its properties
and carry on its business as now being conducted. Each EOP Subsidiary is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing
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of its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have an EOP Material Adverse Effect.
Complete and correct copies of the Articles of Incorporation, Bylaws,
organization documents and partnership, joint venture and operating agreements
of each EOP Subsidiary, as amended to the date of this Agreement, have been
previously delivered or made available to Beacon. No effective amendment has
been made to the EOP Partnership Agreement since September 3, 1997.
3.3 Capital Structure.
(a) The authorized shares of beneficial interest of EOP consist
of 750,000,000 EOP Common Shares, 152,180,770 of which are issued and
outstanding as of September 15, 1997 (including 502,740 EOP Common Shares owned
by EOP Partnership), and 100,000,000 preferred shares of beneficial interest,
none of which are issued or outstanding as of the date of this agreement.
(b) Set forth in Schedule 3.3(b) to the EOP Disclosure Letter is
a true and complete list of the following: (i) each qualified or nonqualified
option to purchase EOP's shares of beneficial interest granted under the
Employee Share Option and Restricted Share Plan or any other formal or informal
arrangement (collectively, the "EOP Options"); and (ii) all other warrants or
other rights to acquire EOP's shares of beneficial interest, all limited share
appreciation rights, phantom shares, dividend equivalents, performance units and
performance shares which are outstanding on the date of this Agreement. Schedule
3.3(b) to the EOP Disclosure Letter sets forth the EOP Options granted to EOP's
Chief Executive Officer and four other most highly compensated officers, the
date of each grant, the status of each EOP Option as qualified or nonqualified
under Section 422 of the Code, the number of EOP Common Shares subject to each
EOP Option, the number and type of EOP's shares of beneficial interest subject
to EOP Options that are currently exercisable, the exercise price per share, and
the number and type of such shares subject to share appreciation rights. On the
date of this Agreement, except as set forth in this Section 3.3 or in Schedule
3.3(b) to the EOP Disclosure Letter, no shares of beneficial interest of EOP
were outstanding or reserved for issuance (except for EOP Common Shares reserved
for issuance upon redemption of EOP OP Units).
(c) All outstanding shares of beneficial interest of EOP are
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of EOP having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of EOP
may vote.
(d) Except (i) as set forth in this Section 3.3 or in Schedule
3.3(d) to the EOP Disclosure Letter and (ii) EOP OP Units, which may be
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redeemed for EOP Common Shares, as of the date of this Agreement, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which EOP or any EOP
Subsidiary is a party or by which such entity is bound, obligating EOP or any
EOP Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of beneficial interest, voting securities or other
ownership interests of EOP or any EOP Subsidiary or obligating EOP or any EOP
Subsidiary to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking (other
than to EOP or an EOP Subsidiary).
(e) As of the date hereof, 165,248,223 EOP OP Units are validly
issued and outstanding, fully paid and nonassessable and not subject to
preemptive rights, of which 155,196,855 are owned by EOP and EOP Subsidiaries.
Schedule 3.3(e) to the EOP Disclosure Schedule sets forth the name of each
holder of EOP OP Units and the number of EOP OP Units owned by each such holder
as of the date of this Agreement. The EOP OP Units are subject to no
restrictions except as set forth in the EOP Partnership Agreement. EOP
Partnership has not issued or granted and is not a party to any outstanding
commitments of any kind relating to, or any presently effective agreements or
understandings with respect to, interests in EOP Partnership, whether issued or
unissued, or securities convertible or exchangeable into interests in EOP
Partnership.
(f) All dividends on EOP Common Shares and all distributions on
EOP OP Units which have been declared prior to the date of this Agreement have
been paid in full, except that the dividends payable on EOP Common Shares (along
with the corresponding distributions payable on EOP OP Units) which were
declared on September 11, 1997 and are payable on October 9, 1997 have not yet
been paid.
(g) The EOP Common Shares and the EOP Preferred Shares to be
issued by EOP, and the EOP OP Units to be issued by the EOP Partnership pursuant
to this Agreement have been duly authorized for issuance, and upon issuance will
be duly and validly issued, fully paid and nonassessable.
3.4 Other Interests. Except for interests in the EOP Subsidiaries
and certain other entities as set forth in Schedule 3.4(a) or Schedule 3.5 to
the EOP Disclosure Letter, neither EOP nor any of its Subsidiaries owns directly
or indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or other entity (other
than investments in short-term investment securities). With respect to such
other interests, EOP or EOP Partnership is a partner or stockholder in good
standing, and owns such interests free and clear of all Liens. Neither EOP nor
any of the EOP Subsidiaries is in breach of any provision of any agreement,
document or contract governing its rights in or to the interests owned or held
by it, all of which agreements, documents and contracts are (a) set forth in
Schedule 3.4(b) to the EOP Disclosure Letter (or
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disclosed in the EOP SEC Documents (as defined below)), (b) unmodified except as
described therein and (c) in full force and effect. To the Knowledge of EOP (as
defined in Section 3.19), the other parties to any such agreement, document or
contract which is of a material nature are not in breach of any of their
respective obligations under such agreements, documents or contracts.
3.5 Authority; Noncontravention; Consents.
(a) EOP has the requisite power and authority to enter into this
Agreement and, subject to the requisite shareholder approval of the Merger (the
"EOP Shareholder Approvals" and, together with the Beacon Shareholder Approvals,
the "Shareholder Approvals"), to consummate the transactions contemplated by
this Agreement to which EOP is a party. The execution and delivery of this
Agreement by EOP and the consummation by EOP of the transactions contemplated by
this Agreement to which EOP is a party have been duly authorized by all
necessary action on the part of EOP, except for and subject to the EOP
Shareholder Approvals and the requisite approval, if any is required, of the
partners of EOP Partnership. This Agreement has been duly executed and delivered
by EOP and constitutes a valid and binding obligation of EOP, enforceable
against EOP in accordance with and subject to its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
(b) EOP Partnership has the requisite partnership power and,
subject to the requisite partner approval of the Partnership Merger (if any),
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement to which EOP Partnership is a party. The
execution and delivery of this Agreement by EOP Partnership and the consummation
by EOP Partnership of the transactions contemplated by this Agreement to which
EOP Partnership is a party have been duly authorized by all necessary action on
the part of EOP Partnership, except for and subject to the EOP Shareholder
Approvals. This Agreement has been duly executed and delivered by EOP
Partnership and constitutes a valid and binding obligation of EOP Partnership,
enforceable against EOP Partnership in accordance with and subject to its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
(c) Except as set forth in Schedule 3.5(c)(1) to the EOP
Disclosure Letter, the execution and delivery of this Agreement by EOP and EOP
Partnership do not, and the consummation of the transactions contemplated by
this Agreement to which EOP or EOP Partnership is a party and compliance by EOP
or EOP Partnership with the provisions of this Agreement will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to loss of a material benefit under,
or result in the creation of
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any Lien upon any of the properties or assets of EOP or any EOP Subsidiary
under, (i) the EOP Declaration of Trust or the EOP Bylaws or the comparable
charter or organizational documents or partnership, operating or similar
agreement (as the case may be) of any other EOP Subsidiary, each as amended or
supplemented to the date of this Agreement, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, reciprocal easement agreement, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
EOP or any EOP Subsidiary or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any Laws applicable to EOP or any EOP Subsidiary or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, loss or Liens that
individually or in the aggregate would not (x) have an EOP Material Adverse
Effect or (y) prevent the consummation of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to EOP or any EOP Subsidiary in connection with the execution and
delivery of this Agreement or the consummation by EOP of any of the transactions
contemplated by this Agreement, except for (i) the filing with the SEC of (x)
the Registration Statement (as defined in Section 5.1) and (y) such reports
under Section 13 (a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (ii) the
acceptance for record of the Articles of Merger by the Department, (iii) the
filing of the Certificate of Merger with the Secretary, (iv) such filings as may
be required in connection with the payment of any transfer and gains taxes and
(v) such other consents, approvals, orders, authorizations, registrations,
declarations and filings (A) as are set forth in Schedule 3.5(c)(2) to the EOP
Disclosure Letter or (B) as may be required under (x) federal, state or local
environmental laws or (y) the "blue sky" laws of various states, to the extent
applicable, or (C) which, if not obtained or made, would not prevent or delay in
any material respect the consummation of any of the transactions contemplated by
this Agreement or otherwise prevent EOP from performing its obligations under
this Agreement in any material respect or have, individually or in the
aggregate, an EOP Material Adverse Effect.
3.6 SEC Documents; Financial Statements; Undisclosed Liabilities.
EOP and EOP Operating Partnership have filed all required reports, schedules,
forms, statements and other documents with the SEC since July 8, 1997 through
the date hereof (the "EOP SEC Documents"). Schedule 3.6(a) to the EOP Disclosure
Letter contains a complete list of all EOP SEC Documents filed by EOP under the
Exchange Act since July 8, 1997 and on or prior to the date of this Agreement.
All of the EOP SEC Documents (other than preliminary material), as of their
respective filing dates, complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and, in each case, the
rules and regulations promulgated thereunder applicable to such EOP SEC
Documents. None of the EOP SEC Documents at the time of filing contained any
untrue statement of
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a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
such statements have been modified or superseded by later EOP SEC Documents
filed and publicly available prior to the date of this Agreement. The
consolidated financial statements of EOP and the EOP Subsidiaries included in
the EOP SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by the applicable
rules and regulations of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presented, in accordance with the applicable requirements of GAAP and the
applicable rules and regulations of the SEC, the consolidated financial position
of EOP and the EOP Subsidiaries, taken as a whole, as of the dates thereof and
the consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except for liabilities and obligations set forth in the EOP SEC
Documents or in Schedule 3.6(b) to the EOP Disclosure Letter, neither EOP nor
any EOP Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a consolidated balance sheet of EOP or in the notes thereto and which,
individually or in the aggregate, would have an EOP Material Adverse Effect.
3.7 Absence of Certain Changes or Events. Except as disclosed in the
EOP SEC Documents or in Schedule 3.7 to the EOP Disclosure Letter, since the
date of the most recent audited financial statements included in the EOP SEC
Documents (the "EOP Financial Statement Date"), EOP and the EOP Subsidiaries
have conducted their business only in the ordinary course (taking into account
prior practices, including the acquisition of properties and issuance of
securities) and there has not been (a) any material adverse change in the
business, financial condition or results of operations of EOP and the EOP
Subsidiaries taken as a whole (a "EOP Material Adverse Change"), nor has there
been any occurrence or circumstance that with the passage of time would
reasonably be expected to result in an EOP Material Adverse Change, (b) except
for regular quarterly distributions (in the case of EOP) not in excess of $.30
per EOP Common Share, subject to rounding adjustments as necessary and with
customary record and payment dates, any authorization, declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of EOP's shares of beneficial interest, (c) any
split, combination or reclassification of any of EOP's shares of beneficial
interest, (d) any damage, destruction or loss, whether or not covered by
insurance, that has or would have an EOP Material Adverse Effect or (e) any
change made prior to the date of this Agreement in accounting methods,
principles or practices by EOP or any EOP Subsidiary materially affecting its
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assets, liabilities or business, except insofar as may have been disclosed in
the EOP SEC Documents or required by a change in GAAP.
3.8 Litigation. Except as disclosed in the EOP SEC Documents or in
Schedule 3.8 to the EOP Disclosure Letter, and other than personal injury and
other routine tort litigation arising from the ordinary course of operations of
EOP and the EOP Subsidiaries (a) which are covered by adequate insurance or (b)
for which all material costs and liabilities arising therefrom are reimbursable
pursuant to common area maintenance or similar agreements, there is no suit,
action or proceeding pending (in which service of process has been received by
an employee of EOP or an EOP Subsidiary) or, to the Knowledge of EOP (as defined
in Section 3.19), threatened in writing against or affecting EOP or any EOP
Subsidiary that, individually or in the aggregate, could reasonably be expected
to (i) have an EOP Material Adverse Effect or (ii) prevent the consummation of
any of the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against EOP or any EOP Subsidiary having, or which,
insofar as reasonably can be foreseen, in the future would have, any such
effect.
3.9 Properties.
(a) Except as set forth in Schedule 3.9(a) to the EOP Disclosure
Letter, EOP or one of the EOP Subsidiaries owns fee simple title to each of the
real properties listed in the EOP SEC Filings as owned by it (the "EOP
Properties"), except where the failure to own such title would not have an EOP
Material Adverse Effect.
(b) The EOP Properties are not subject to any Encumbrances or
Property Restrictions which reasonably could be expected to cause an EOP
Material Adverse Effect.
(c) Valid policies of title insurance have been issued insuring
EOP's or the applicable EOP Subsidiary's fee simple title or leasehold estate,
as the case may be, to the EOP Properties in amounts which are, except in the
case of San Xxxxxx Plaza, at least equal to the purchase price thereof paid by
EOP or the applicable EOP Subsidiaries therefor, except where the failure to
obtain such title insurance would not have an EOP Material Adverse Effect.
(d) EOP has no Knowledge (i) that it has failed to obtain a
certificate, permit or license from any governmental authority having
jurisdiction over any of the EOP Properties where such failure would have an EOP
Material Adverse Effect or of any pending threat of modification or cancellation
of any of the same which would have an EOP Material Adverse Effect, (ii) of any
written notice of any violation of any federal, state or municipal law,
ordinance, order, rule, regulation or requirement affecting any of the EOP
Properties issued by any
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governmental authorities which would have an EOP Material Adverse Effect or
(iii) of any structural defects relating to EOP Properties, EOP Properties whose
building systems are not in working order, physical damage to any EOP Property
for which there is no insurance in effect covering the cost of restoration, any
current renovation or uninsured restoration, except such structural defects,
building systems not in working order, physical damage, renovation and
restoration which, in the aggregate, would not have an EOP Material Adverse
Effect.
(e) Except as set forth in Schedule 3.9(e) to the EOP Disclosure
Letter, neither EOP nor any of the EOP Subsidiaries has received any written or
published notice to the effect that (i) any condemnation or rezoning proceedings
are pending or threatened with respect to any of the EOP Properties or (ii) any
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated by the continued maintenance, operation or use of any buildings or
other improvements on any of the EOP Properties or by the continued maintenance,
operation or use of the parking areas, other than such notices which, in the
aggregate, would not have an EOP Material Adverse Effect.
(f) All work to be performed, payments to be made and actions to
be taken by EOP or the EOP Subsidiaries prior to the date hereof pursuant to any
agreement entered into with a governmental body or authority in connection with
a site approval, zoning reclassification or similar action relating to any EOP
Properties (e.g., Local Improvement District, Road Improvement District,
Environmental Mitigation), has been performed, paid or taken, as the case may
be, except where the failure to do so would, in the aggregate, not have an EOP
Material Adverse Effect, and EOP has no Knowledge of any planned or proposed
work, payments or actions that may be required after the date hereof pursuant to
such agreements.
(g) The rent roll previously provided by EOP to Beacon (the "EOP
Rent Roll") lists each EOP Space Lease (as defined below) in effect as of the
respective dates in August 1997 indicated in the EOP Rent Roll. "EOP Space
Lease" means each lease or other right of occupancy affecting or relating to a
property in which EOP Partnership (or an entity in which it directly or
indirectly has an interest) is the landlord, either pursuant to the terms of
the lease agreement or as successor to any prior landlord, but excluding any
ground lease. EOP has made available to Beacon true, correct and complete
copies of all EOP Space Leases, including all amendments, modifications,
supplements, renewals, extensions and guarantees related thereto, as of the
date hereof. Except for discrepancies that, either individually or in the
aggregate, would not reasonably be expected to have an EOP Material Adverse
Effect, all information set forth in the EOP Rent Roll is true, correct, and
complete as of the date thereof. Except as set forth in a delinquency report
made available to EOP, neither EOP nor any EOP Subsidiary, on the one hand,
nor, to the Knowledge of EOP or EOP Partnership, any other party, on the other
hand, is in monetary
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default under any EOP Space Lease, except for such defaults that would not
reasonably be expected to have a Material Adverse Effect.
3.10 Environmental Matters. Except as disclosed in the EOP SEC
Documents or on Schedule 3.10 to the EOP Disclosure Letter, (a) none of EOP, any
of the EOP Subsidiaries or, to EOP's Knowledge, any other Person has caused or
permitted the unlawful presence of any Hazardous Materials on or under any of
the EOP Properties or (b) any unlawful spills, releases, discharges or disposal
of Hazardous Materials to have occurred or be presently occurring on, under or
from the EOP Properties as a result of any construction on or operation and use
of such properties, which presence or occurrence would, individually or in the
aggregate, have an EOP Material Adverse Effect; and in connection with the
construction on or operation and use of the EOP Properties, EOP and the EOP
Subsidiaries have not failed to comply in any material respect with all
applicable local, state and federal environmental laws, regulations, ordinances
and administrative and judicial orders relating to the generation, recycling,
reuse, sale, storage, handling, transport and disposal of any Hazardous
Materials, except to the extent such failure to comply, individually or in the
aggregate, would not have an EOP Material Adverse Effect.
3.11 Taxes.
(a) Each of EOP and the EOP Subsidiaries (i) has filed all Tax
returns and reports required to be filed by it (after giving effect to any
filing extension properly granted by a Governmental Entity having authority to
do so), and all such returns and reports are accurate and complete in all
material respects, and (ii) has paid (or EOP has paid on its behalf) all Taxes
shown on such returns and reports as required to be paid by it except where the
failure to file such tax returns or reports and failure to pay such Taxes would
not have an EOP Material Adverse Effect. The most recent audited financial
statements contained in the EOP SEC Documents reflect an adequate reserve for
all material Taxes payable by EOP and the EOP Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
Since the EOP Financial Statement Date, EOP has incurred no liability for taxes
under Sections 857(b), 860(c) or 4981 of the Code, including without limitation
any tax arising from a prohibited transaction described in Section 857(b)(6) of
the Code, and neither EOP nor any EOP Subsidiary has incurred any material
liability for taxes other than in the ordinary course of business. No event has
occurred, and no condition or circumstance exists, which presents a material
risk that any material Tax described in the preceding sentence will be imposed
upon EOP. To the Knowledge of EOP, no deficiencies for any Taxes have been
proposed, asserted or assessed against EOP or any of the EOP Subsidiaries, and
no requests for waivers of the time to assess any such Taxes are pending.
(b) EOP (i) has operated, and intends to continue to operate,
in such a manner as to qualify as a REIT within the meaning of Section 856 of
the
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Code for the taxable year ending December 31, 1997 and intends to continue
to operate in such a manner as to qualify as a REIT for the taxable year that
includes the Closing Date and (ii) has not taken or omitted to take any action
which would reasonably be expected to result in a challenge to its status as a
REIT, and to EOP's Knowledge, no such challenge is pending or threatened. Each
EOP Subsidiary which is a partnership, joint venture or limited liability
company (i) has been treated since its formation and continues to be treated for
federal income tax purposes as a partnership and not as a corporation or as an
association taxable as a corporation and (ii) has not since the later of its
formation or the acquisition by EOP of a direct or indirect interest therein,
owned any assets (including, without limitation, securities) that would cause
EOP to violate Section 856(c)(5) of the Code. Each EOP Subsidiary which is a
corporation (other than EOP Management Corp.) has been since its formation a
qualified REIT subsidiary under Section 856(i) of the Code. EOP Partnership is
not a publicly traded partnership within the meaning of Section 7704 of the
Code. Except as set forth in Schedule 3.11 to the EOP Disclosure Letter neither
EOP nor any EOP Subsidiary holds any asset (x) the disposition of which would be
subject to rules similar to Section 1374 of the Code as a result of a notice
under IRS Notice 88-19 or (y) which is subject to a consent filed pursuant to
Section 341(f) of the Code and the regulations thereunder.
3.12 Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than X.X. Xxxxxx Securities
Inc. and Xxxxxxx Xxxxx & Co., the fees and expenses of which will be paid by EOP
and are described in the respective engagement letters with X.X. Xxxxxx
Securities Inc. and Xxxxxxx Xxxxx & Co., true, correct and complete copies of
which have previously been given to Beacon, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of EOP or any EOP Subsidiary.
3.13 Compliance with Laws. Neither EOP nor any of the EOP
Subsidiaries has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business, properties or operations, except to the extent that
such violation or failure would not have an EOP Material Adverse Effect.
3.14 Contracts; Debt Instruments. Neither EOP nor any EOP Subsidiary
has received a written notice that EOP or any EOP Subsidiary is in violation of
or in default under (nor to the Knowledge of EOP does there exist any condition
which upon the passage of time or the giving of notice or both would cause such
a violation of or default under) any material loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license or any
other material contract, agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound, nor to the
Knowledge of EOP does such a violation or default exist, except to the extent
such violation or
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default, individually or in the aggregate, would not have an EOP Material
Adverse Effect, except as set forth in the EOP SEC Documents or in Schedule 3.14
to the EOP Disclosure Letter.
3.15 Opinion of Financial Advisor. EOP has received the oral opinion
of X.X. Xxxxxx Securities Inc., satisfactory to EOP, to the effect that the
consideration to be paid by EOP and EOP Partnership in connection with the
Mergers is fair, from a financial point of view, to EOP and EOP Operating
Partnership.
3.16 State Takeover Statutes. EOP has taken all action necessary to
exempt transactions between EOP and Beacon and its Affiliates from the operation
of Takeover Statutes.
3.17 Investment Company Act of 1940. Neither EOP nor any of the EOP
Subsidiaries is, or at the Effective Time will be, required to be registered
under the 1940 Act.
3.18 Definition of Knowledge of EOP. As used in this Agreement, the
phrase "Knowledge of EOP" (or words of similar import) means the knowledge of
those individuals identified in Schedule 3.19 to the EOP Disclosure Letter.
3.19 EOP Not an Interested Stockholder. EOP is not an "interested
stockholder" of Beacon or an "affiliate of an interested stockholder" of Beacon
within the meaning of Section 3-601 of the MGCL.
ARTICLE 4
COVENANTS
4.1 Conduct of Beacon's and Beacon Partnership's Business
Pending Merger. During the period from the date of this Agreement to the
Effective Time, except as consented to in writing by EOP or as expressly
provided for in this Agreement (including as contemplated by the Principal
Terms of the Tax Protection Agreements set forth as Schedule 5.16 hereto),
Beacon and Beacon Partnership shall, and shall cause (or, in the case of Beacon
Subsidiaries that Beacon or Beacon Partnership do not control, shall use
reasonable best efforts to cause) each of the Beacon Subsidiaries to:
(a) conduct its business only in the usual, regular and ordinary
course and in substantially the same manner as heretofore conducted;
(b) preserve intact its business organizations and goodwill and
use reasonable best efforts to keep available the services of its officers and
employees;
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(c) confer on a regular basis with one or more representatives
of EOP to report operational matters of materiality and, subject to Section 4.3,
any proposals to engage in material transactions;
(d) promptly notify EOP of any material emergency or other
material change in the condition (financial or otherwise), business, properties,
assets, liabilities or the normal course of its businesses or in the operation
of its properties, or of any material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated);
(e) promptly deliver to EOP true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) maintain its books and records in accordance with GAAP
consistently applied and not change in any material manner any of its methods,
principles or practices of accounting in effect at the Beacon Financial
Statement Date, except as may be required by the SEC, applicable law or GAAP;
(g) duly and timely file all reports, tax returns and other
documents required to be filed with federal, state, local and other authorities,
subject to extensions permitted by law, provided Beacon notifies EOP that it is
availing itself of such extensions and provided such extensions do not adversely
affect Beacon's status as a qualified REIT under the Code;
(h) not make or rescind any express or deemed election relative
to Taxes (unless required by law or necessary to preserve Beacon's status as a
REIT or the status of any Beacon Subsidiary as a partnership for federal income
tax purposes, as the case may be);
(i) make all capital expenditures, and expenditures relating to
leasing, in accordance with a budget of Beacon approved by EOP, which approval
shall not be unreasonably withheld, and will not (A) acquire, enter into any
option to acquire, or exercise an option or other right or election or enter
into any other commitment or contractual obligation (each, a "Commitment") for
the acquisition of any real property or other transaction (other than
Commitments referred to in Schedule 4.1(i) to the Beacon Disclosure Letter)
involving in excess of $100,000 which is not included in its budget approved by
EOP, encumber assets or commence construction of, or enter into any Commitment
to develop or construct other real estate projects, except in the ordinary
course of its office property business or (B) incur or enter into any Commitment
to incur additional indebtedness (secured or unsecured) except for working
capital under its revolving line(s) of credit and Commitments for indebtedness
described on Schedule 4.1(i) to the Beacon Disclosure Letter;
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(j) not amend its Articles of Incorporation, as amended, or its
Amended and Restated Bylaws, or the articles or certificate of incorporation,
bylaws, code of regulations, partnership agreement, operating agreement or joint
venture agreement or comparable charter or organization document of any Beacon
Subsidiary;
(k) make no change in the number of shares of capital stock,
membership interests or units of limited partnership interest issued and
outstanding, other than pursuant to (i) the exercise of options disclosed in
Schedule 2.3 to the Beacon Disclosure Letter or (ii) the redemption of Beacon OP
Units under existing contracts described on Schedule 2.18, or pursuant to the
Beacon Partnership Agreement, for cash or, at Beacon's option, Beacon Common
Shares;
(l) grant no options or other right or commitment relating to
its shares of capital stock, membership interests or units of limited
partnership interest or any security convertible into its shares of capital
stock, membership interests or units of limited partnership interest, or any
security the value of which is measured by shares of capital stock, or any
security subordinated to the claim of its general creditors and not amend or
waive any rights under any of the Beacon Stock Options;
(m) except as provided in Section 5.10 and in connection with
the use of Beacon Common Shares to pay the exercise price or tax withholding in
connection with equity-based employee benefit plans by the participants therein,
not (i) authorize, declare, set aside or pay any dividend or make any other
distribution or payment with respect to any Beacon Common Shares or Beacon OP
Units or (ii) directly or indirectly redeem, purchase or otherwise acquire any
shares of capital stock, membership interests or units of partnership interest
or any option, warrant or right to acquire, or security convertible into, shares
of capital stock, membership interests, or units of partnership interest of
Beacon, except for (A) redemptions of Beacon Common Shares required under
Section 9.5 of the Articles of Incorporation of Beacon in order to preserve the
status of Beacon as a REIT under the Code, and (B) redemptions of Beacon OP
Units, whether or not outstanding on the date of this Agreement, under the
Beacon Partnership Agreement in which Beacon Common Shares are utilized;
(n) not sell, lease, mortgage, subject to Lien or otherwise
dispose of any of the Beacon Properties, except in connection with a transaction
that is permitted by Section 4.1(i) or that is made in the ordinary course of
business and is the subject of a binding contract in existence on the date of
this Agreement and disclosed in Schedule 2.18 to the Beacon Disclosure Schedule;
(o) not sell, lease, mortgage, subject to Lien or otherwise
dispose of any of its personal property or intangible property, except in
connection
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with a transaction that is permitted by Section 4.1(n) or that is made in the
ordinary course of business and is not material, individually or in the
aggregate;
(p) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than loans, advances and capital
contributions to Beacon Subsidiaries in existence on the date hereof;
(q) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) furnished
to EOP or incurred in the ordinary course of business consistent with past
practice;
(r) not guarantee the indebtedness of another Person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another Person or enter into any arrangement having the economic effect of
any of the foregoing;
(s) not enter into any Commitment with any officer, director or
Affiliate of Beacon or any of the Beacon Subsidiaries or any material Commitment
with any consultant;
(t) not increase any compensation or enter into or amend any
employment agreement described in Schedule 2.18 to the Beacon Disclosure Letter
with any of its officers, directors or employees earning more than $50,000 per
annum, other than as required by any contract or Plan or in accordance with
waivers by employees of benefits under such agreements;
(u) not adopt any new employee benefit plan or amend any
existing plans or rights, except for changes to severance benefits to provide
that an employee whose position is transferred to a location outside the
standard metropolitan statistical area in which such employee is currently
employed shall not forfeit severance benefits by reason of failure to accept
such transfer, changes which are required by law and changes which are not more
favorable to participants than provisions presently in effect;
(v) not settle any shareholder derivative or class action claims
arising out of or in connection with any of the transactions contemplated by
this Agreement;
(w) not change the ownership of any of its Subsidiaries, except
changes which arise as a result of the acquisition of Beacon OP Units in
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exchange for Beacon Common Shares pursuant to exercise of the Beacon OP Unit
redemption right under Section 8.6 of the Beacon Partnership Agreement;
(x) not accept a promissory note in payment of the exercise
price payable under any option to purchase Beacon Common Shares; and
(y) not enter into, or modify, amend or breach any Tax
Protection Agreement.
4.2 Conduct of EOP's and EOP Partnership's Business Pending Merger.
During the period from the date of this Agreement to the Effective Time, except
as (i) contemplated by this Agreement, or (ii) consented to in writing by
Beacon, EOP and EOP Partnership shall, and shall cause (or, in the case of EOP
Subsidiaries that EOP or EOP Partnership do not control, use reasonable best
efforts to cause) each of the EOP Subsidiaries to:
(a) preserve intact its business organizations and goodwill and
use reasonable best efforts to keep available the services of its officers and
employees;
(b) confer on a regular basis with one or more representatives
of Beacon to report operational matters of materiality which would have an EOP
Material Adverse Effect;
(c) promptly notify Beacon of any material emergency or other
material change in the condition (financial or otherwise), business, properties,
assets, liabilities, prospects or the normal course of its businesses or in the
operation of its properties, or of any material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated);
(d) promptly deliver to Beacon true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(e) maintain its books and records in accordance with GAAP
consistently applied and not change in any material manner any of its methods,
principles or practices of accounting in effect at the EOP Financial Statement
Date, except as may be required by the SEC, applicable law or GAAP;
(f) duly and timely file all reports, tax returns and other
documents required to be filed with federal, state, local and other authorities,
subject to extensions permitted by law, provided such extensions do not
adversely affect EOP's status as a qualified REIT under the Code;
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(g) not make or rescind any express or deemed election relative
to Taxes (unless required by law or necessary to preserve EOP's status as a REIT
or the status of any EOP Subsidiary as a partnership for federal income tax
purposes or as a qualified REIT subsidiary under Section 856(i) of the Code, as
the case may be);
(h) not enter into any Commitment for the acquisition of any
real property (other than all real estate projects described in Schedule 4.2(h)
to the EOP Disclosure Letter) if the amount of such Commitment would cause the
aggregate amount of all such Commitments subsequent to the date hereof to exceed
$1,300,000,000 unless such Commitment has been approved by Beacon;
(i) not amend the EOP Declaration of Trust or the EOP Bylaws, or
the articles or certificate of incorporation, bylaws, code of regulations,
partnership agreement, operating agreement or joint venture agreement or
comparable charter or organization document of any EOP Subsidiary, including the
EOP Partnership Agreement (except to the extent necessary to reflect the
admission of additional limited partners and other amendments in connection
therewith that can be made by EOP without a vote of limited partners and that
will not, individually or in the aggregate, materially adversely affect the
rights or obligations of holders of EOP OP Units);
(j) except as provided in Section 5.10 hereof and in connection
with the use of EOP Common Shares to pay the exercise price or tax withholding
in connection with equity-based employee benefit plans by the participants
therein, not (i) authorize, declare, set aside or pay any dividend or make any
other distribution or payment with respect to any EOP Common Shares or EOP OP
Units or (ii) directly or indirectly redeem, purchase or otherwise acquire any
shares of capital stock, membership interests or units of partnership interest
or any option, warrant or right to acquire, or security convertible into, shares
of capital stock, membership interests, or units of partnership interest of EOP,
except for (A) redemptions of EOP Common Shares required under Section 7.3.6 of
the EOP Declaration of Trust in order to preserve the status of EOP as a REIT
under the Code, and (B) redemptions of EOP OP Units, whether or not outstanding
on the date of this Agreement, under the EOP Partnership Agreement in which EOP
Common Shares are utilized;
(k) not sell, lease, mortgage, subject to Lien or otherwise
dispose of any of the EOP Properties, except in connection with a transaction
that would not reasonably be expected to have an EOP Material Adverse Effect;
(l) not sell, lease, mortgage, subject to Lien or otherwise
dispose of any of its personal property or intangible property, except in
connection with a transaction that is permitted by Section 4.2(k) or that is not
material, individually or in the aggregate;
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(m) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
if it would reasonably be expected to have an EOP Material Adverse Effect;
(n) not directly or indirectly through a subsidiary, merge or
consolidate with, or acquire all or substantially all of the assets of, or the
beneficial ownership of a majority of the outstanding capital stock or other
equity interests in any person or entity whose securities are registered under
the Exchange Act unless such transaction has been approved by Beacon; and
(o) except as contemplated by this Agreement, not issue any EOP
or EOP Partnership securities pursuant to a Registration Statement filed with
the SEC relating to the public offering of any EOP or EOP Partnership securities
from the date hereof until the date of the Proxy Statement (as defined in
Section 5.1) unless such issuance has been approved by Beacon.
4.3 No Solicitation. Prior to the Effective Time, Beacon agrees, for
itself and in its capacity as general partner of the Beacon Partnership, that:
(a) neither it nor any of the Beacon Subsidiaries shall invite,
initiate, solicit or encourage, directly or indirectly, any inquiries,
proposals, discussions or negotiations or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a merger, acquisition, tender offer, exchange
offer, transaction resulting in the issuance of securities representing 10% or
more of the outstanding equity securities of Beacon, consolidation, share
exchange, business combination, sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 10% or more of the assets or equity securities
(including, without limitation, partnership interests and units) of Beacon or
Beacon Partnership, other than the transactions contemplated by this Agreement
(any such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or engage in any discussions or negotiations concerning or provide
any confidential or non-public information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal;
(b) neither it nor any of the Beacon Subsidiaries will permit
any of its officers, directors, employees, affiliates, agents, investment
bankers, financial advisors, attorneys, accountants, brokers, finders or other
representative retained by Beacon to engage in any of the activities described
in Section 4.3(a);
(c) it and the Beacon Subsidiaries will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing and will
take the necessary steps to inform the individuals or entities referred to in
Section 4.3(b) of the obligations undertaken in this Section 4.3; and
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(d) it will notify EOP immediately if Beacon or any of the
Beacon Subsidiaries receives any such inquiries or proposals, or any requests
for such information, or if any such negotiations or discussions are sought to
be initiated or continued with it;
provided, however, that nothing contained in this Section 4.3 shall prohibit the
Board of Directors of Beacon (including with respect to Beacon's capacity as
general partner of Beacon Partnership) from (i) furnishing information to or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited Acquisition Proposal, if, and only to the extent that (A) a
majority of the Board of Directors of Beacon determines in good faith, based
upon the advice of its outside counsel, that such action is required for the
Board of Directors of Beacon to comply with its duties to shareholders imposed
by applicable law and (B) prior to furnishing such information to, or entering
into discussions or negotiations with, such person or entity, Beacon provides
written notice to EOP to the effect that it is furnishing information to, or
entering into discussions with, such person or entity; and (ii) making any
disclosure required by applicable law with regard to an Acquisition Proposal.
Nothing in this Section 4.3 shall (x) permit Beacon to terminate this Agreement
(except as specifically provided in Article 7 hereof), (y) permit Beacon to
enter into an agreement for an Acquisition Proposal during the term of this
Agreement or (z) affect any other obligation of Beacon under this Agreement;
provided, however, that a majority of the Board of Directors of Beacon may
approve and recommend a Superior Acquisition Proposal and, in connection
therewith, withdraw or modify its approval or recommendation of this Agreement
and the Merger in accordance with Section 5.1(e). Any disclosure that the Board
of Directors of Beacon may be compelled to make with respect to the receipt of
an Acquisition Proposal in order to comply with its duties to shareholders
imposed by applicable law or Rule 14d-9 or 14e-2 of the Exchange Act will not
constitute a violation of this Section 4.3. As used herein, "Superior
Acquisition Proposal" means a bona fide Acquisition Proposal made by a third
party which a majority of the members of the Board of Directors of Beacon
resolves in good faith to be in the best interests of and more favorable to
Beacon's shareholders than the Merger and which the Board of Directors of Beacon
determines is reasonably capable of being consummated.
4.4 Affiliates. Prior to the Effective Time, Beacon shall cause to
be prepared and delivered to EOP a list (reasonably satisfactory to counsel for
EOP) identifying all persons who, at the time of the Beacon and EOP Shareholders
Meetings, may be deemed to be "affiliates" of Beacon as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Affiliates").
Beacon shall use its reasonable best efforts to cause each person who is
identified as an Affiliate in such list to deliver to EOP on or prior to the
Effective Time a written agreement, in the form previously approved by the
parties hereto, that such Affiliate will not sell, pledge, transfer or otherwise
dispose of any EOP Common
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Shares issued to such Affiliate pursuant to the Merger, except pursuant to an
effective registration statement under the Securities Act or in compliance
with paragraph (d) of Rule 145 or as otherwise permitted by the Securities Act.
EOP shall be entitled to place legends as specified in such written agreements
on the certificates representing any EOP Common Shares to be received pursuant
to the terms of this Agreement by such Affiliates who have executed such
agreements and to issue appropriate stop transfer instructions to the transfer
agent for the EOP Common Shares issued to such Affiliates, consistent with the
terms of such agreements. The Surviving Trust shall timely file the reports
required to be filed by it under the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as any
Affiliate of Beacon or EOP may reasonably request, all to the extent required
from time to time to enable such Affiliate to sell shares of beneficial
interest of the Surviving Trust received by such Affiliate in the Merger
without registration under the Securities Act pursuant to (i) Rule 145(d)(1)
under the Securities Act, as such rule may be amended from to time, or (ii) any
successor rule or regulation hereafter adopted by the SEC.
4.5 Other Actions. Each of Beacon and Beacon Partnership on the one
hand and EOP and EOP Partnership on the other hand shall not, and shall use
commercially reasonable efforts to cause their respective subsidiaries and joint
ventures not to take, any action that would result in (i) any of the
representations and warranties of such party (without giving effect to any
"knowledge" qualification) set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
(without giving effect to any "knowledge" qualification) that are not so
qualified becoming untrue in any material respect or (iii) except as
contemplated by Section 4.3, any of the conditions to the Merger set forth in
Article 6 not being satisfied.
ARTICLE 5
ADDITIONAL COVENANTS
5.1 Preparation of the Registration Statement and the Proxy
Statement; Beacon Shareholders Meeting, Beacon Unitholders Consent Solicitation
and EOP Shareholders Meeting.
(a) As promptly as practicable after execution of this
Agreement, (i) each of Beacon and EOP shall prepare and file with the SEC (with
appropriate requests for confidential treatment, unless the parties hereto
otherwise agree) under the Exchange Act, (x) one or more joint proxy
statements/prospectuses and forms of proxies (such joint proxy
statement(s)/prospectus(es) together with any amendments to supplements thereto,
the "Proxy Statement") relating to the stockholder meetings of each of Beacon
and EOP, the vote of the stockholders of Beacon and EOP with respect to the
Merger, and the consent, if any, of partners of Beacon Partnership and EOP
Partnership in connection with any required Partner
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Approvals and (y) an information statement/prospectus relating to the
issuance of EOP Preferred Shares pursuant to the Merger and (ii) following
clearance by the SEC of the Proxy Statement, EOP shall within two business days
prepare and file with the SEC under the Securities Act a registration statement
on Form S-4 (such registration statement, together with any amendments or
supplements thereto, the "Form S-4"), in which the Proxy Statement and any
information statement/prospectus described in clause (y) above will be
included, as one or more prospectuses in connection with the registration under
the Securities Act of the EOP Common Shares, EOP Preferred Shares and EOP OP
Units to be distributed to the holders of Beacon Common Shares, Beacon
Preferred Stock and Beacon OP Units in the Merger. The respective parties will
cause the Proxy Statement and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Each of Beacon, Beacon Partnership,
EOP and EOP Partnership shall furnish all information about itself and its
business and operations and all necessary financial information to the other as
the other may reasonably request in connection with the preparation of the
Proxy Statement and the Form S-4. EOP shall use its reasonable best efforts,
and Beacon will cooperate with it, to have the Form S-4 declared effective by
the SEC as promptly as practicable (including clearing the Proxy Statement with
the SEC), taking into account EOP's permitted activities hereunder and
applicable legal requirements. Each of Beacon and Beacon Partnership, on the
one hand, and EOP and EOP Partnership, on the other hand, agree promptly to
correct any information provided by it for use in the Proxy Statement and the
Form S-4 if and to the extent that such information shall have become false or
misleading in any material respect, and each of the parties hereto further
agrees to take all steps necessary to amend or supplement the Proxy Statement
and the Form S-4 and to cause the Proxy Statement and the Form S-4 as so
amended or supplemented to be filed with the SEC and to be disseminated to
their respective stockholders and partners, in each case as and to the extent
required by applicable federal and state securities laws. Each of Beacon,
Beacon Partnership, EOP and EOP Partnership agrees that the information
provided by it for inclusion in the Proxy Statement or the Form S-4 and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of stockholders of Beacon and EOP and at the time of
the respective taking of consents, if any, of partners of Beacon Partnership
and EOP Partnership, will not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. EOP will advise and deliver copies (if any) to
Beacon, promptly after it receives notice thereof, of any request by the SEC
for amendment of the Proxy Statement or the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information (regardless
whether such requests relate to EOP or EOP Partnership, on the one hand, and
Beacon or Beacon Partnership, on the other hand), and EOP shall promptly notify
Beacon of (i) the time when the Form S-4 has become
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effective, (ii) or any supplement or amendment thereto has been filed, (iii) the
issuance of any stop order, and (iv) the suspension of the qualification and
registration of the EOP Common Shares, EOP Preferred Shares and EOP OP Units
issuable in connection with the Mergers.
(b) Each of Beacon, Beacon Partnership, EOP and EOP Partnership
shall use its reasonable best efforts to timely mail the joint proxy
statement/prospectus contained in the Form S-4 to its stockholders. It shall be
a condition to the mailing of the joint proxy statement/prospectus that (i) EOP
and EOP Partnership shall have received a "comfort" letter from Coopers &
Xxxxxxx, LLP, independent public accountants for Beacon and Beacon Partnership,
of the kind contemplated by the Statement of Auditing Standards with respect to
Letters to Underwriters promulgated by the American Institute of Certified
Public Accountants (the "AICPA Statement"), dated as of the date on which the
Form S-4 shall become effective and as of the Effective Time, addressed to EOP
and EOP Partnership, in form and substance reasonably satisfactory to EOP and
EOP Partnership, concerning the procedures undertaken by Coopers & Xxxxxxx, LLP
with respect to the financial statements and information of Beacon, Beacon
Partnership and their subsidiaries contained in the Form S-4 and the other
matters contemplated by the AICPA Statement and otherwise customary in scope and
substance or letters delivered by independent public accountants in connection
with transactions such as those contemplated by this Agreement and (ii) Beacon
shall have received a "comfort" letter from Ernst & Young LLP, independent
public accountants for EOP and EOP Partnership, of the kind contemplated by the
AICPA Statement, dated as of the date on which the Form S-4 shall become
effective and as of the Effective Time, addressed to Beacon and Beacon
Partnership, in form and substance reasonably satisfactory to Beacon, concerning
the procedures undertaken by Ernst & Young, LLP with respect to the financial
statements and information of EOP, EOP Partnership and their subsidiaries
contained in the Form S-4 and the other matters contemplated by the AICPA
Statement and otherwise customary in scope and substance for letters delivered
by independent public accountants in connection with transactions such as those
contemplated by this Agreement.
(c) EOP will duly call and as soon as practicable following the
date of this Agreement (but in no event sooner than 20 business days following
the date the Proxy Statement is mailed to the shareholders of EOP), give notice
of, convene and hold a meeting of its shareholders (the "EOP Shareholders
Meeting") for the purpose of obtaining the EOP Shareholder Approvals. EOP will,
through its Board of Trustees, recommend to its shareholders approval of this
Agreement, the Merger, and the transactions contemplated by this Agreement.
(d) On or before September 22, 1997, EOP and EOP Partnership
shall deliver to Beacon and Beacon Partnership (i) a list of all information to
be provided by Beacon or Beacon Partnership that is required to be
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included in the Proxy Statement in accordance with the applicable provisions of
the Securities Act, the Exchange Act and the rules and regulations thereunder
and (ii) an irrevocable letter of credit in the face amount of $10,000,000
issued by a bank reasonably acceptable to the parties, naming Beacon Partnership
as beneficiary, expiring no sooner than June 1, 1998 and payable at site upon
presentation of a sight draft and an affidavit of Beacon Partnership stating
that all conditions to a draw under the letter of credit pursuant to this
Section 5.1(d) have been met and the beneficiaries are entitled to draw the full
amount thereunder. In addition, in the event that EOP and EOP Partnership shall
fail to file the Proxy Statement with the SEC within fifteen (15) days after EOP
and EOP Partnership have received all information requested pursuant to clause
(i) above substantially in final form, EOP and EOP Partnership shall deliver to
Beacon and Beacon Partnership another irrevocable letter of credit in the face
amount of $5,000,000 and otherwise satisfying the requirements of clause (ii)
above. In the event Beacon shall terminate this Agreement pursuant to Section
7.1(e), and provided that Beacon shall not have breached in any material respect
its obligations under this Agreement in any manner that shall have caused the
occurrence of either of the events referred to in clauses (x) and (y) to this
Section 5.1(d), then at any time following the expiration of three (3) business
days after EOP's receipt of written notice of such termination, Beacon shall be
entitled to draw on the letter(s) of credit posted pursuant to this Section
5.1(c) if either of the following events has occurred: (x) EOP and EOP
Partnership shall have failed to file the Proxy Statement with the SEC within
fifteen (15) days after EOP and EOP Partnership have received all information
requested pursuant to clause (i) above substantially in final form or (y) the
Form S-4 shall not have been declared effective by the SEC on or before February
27, 1998. The receipt of Beacon and Beacon Partnership of any amounts pursuant
to this Section 5.1(d) shall not affect the other remedies, if any, available to
such parties.
(e) Beacon will duly call and give notice of and, as soon as
practicable following the date of this Agreement (but in no event sooner than 20
business days following the date the Proxy Statement is mailed to the
shareholders of Beacon), convene and hold a meeting of its shareholders (the
"Beacon Shareholders Meeting") for the purpose of obtaining Beacon Shareholder
Approvals. Beacon will, through its Board of Directors, recommend to its
shareholders approval of this Agreement, the Merger and the transactions
contemplated by this Agreement and include such recommendation in the Proxy
Statement; provided, however, that prior to the Beacon Shareholders Meeting,
such recommendation may be withdrawn, modified or amended if a majority of the
Board of Directors of Beacon determines in good faith, based upon the advice of
its outside counsel, that such action is required for the Board of Directors of
Beacon to comply with its duties to its shareholders imposed by applicable law.
(f) EOP and Beacon shall use their best efforts to convene their
respective shareholder meetings on the same day, which day, subject to the
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provisions of Sections 5.1(c), 5.1(d) and 5.3, shall be a day not later than 45
days after the date the Proxy Statement is mailed.
(g) If on the date for the EOP Shareholders Meeting and Beacon
Shareholders Meeting established pursuant to Section 5.1(f) of this Agreement,
either EOP or Beacon has not received duly executed proxies for a sufficient
number of votes to approve the Merger (but less than a majority of the
outstanding Beacon Common Shares or EOP Common Shares, as the case may be, have
voted against the Merger), then both parties shall recommend the adjournment of
their respective shareholders meetings until one or more dates not later than
the date ten (10) days after the originally scheduled date of the shareholders
meetings.
(h) Beacon will request written consents for approval by the
limited partners of Beacon Partnership of each of the matters described in the
definition of Beacon Partner Approvals. Beacon hereby agrees to vote in favor of
such matters and to recommend to the limited partners of Beacon Partnership that
they approve such matters. EOP will request written consents, if any is
required, by the limited partners, of EOP Partnership of each of the matters
described in the definition of EOP Partner Approvals. EOP hereby agrees to vote,
if any is required, in favor of such matters and to recommend to the limited
partners of EOP Partnership that they approve such matters.
5.2 Access to Information; Confidentiality. Subject to the
requirements of confidentiality agreements with third parties, each of the
parties shall, and shall cause each of its Subsidiaries to, afford to the other
parties and to the officers, employees, accountants, counsel, financial advisors
and other representatives of such other parties, reasonable access during normal
business hours prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
each of the parties shall, and shall cause each of its Subsidiaries to, furnish
promptly to the other parties (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Each of the parties shall, and shall cause its Subsidiaries
to, use commercially reasonable efforts to cause its officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to, hold any nonpublic information in confidence.
5.3 Reasonable Best Efforts; Notification.
(a) Subject to the terms and conditions herein provided, each of
the parties shall: (i) use all reasonable best efforts to cooperate with one
another in (A) determining which filings are required to be made prior to the
Effective Time
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with, and which consents, approvals, permits or authorizations are required to
be obtained prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states and foreign jurisdictions
and any third parties in connection with the execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby and (B)
timely making all such filings and timely seeking all such consents, approvals,
permits and authorizations; (ii) use all reasonable best efforts (other than the
payment of money) to obtain in writing any consents required from third parties
to effectuate the Merger, such consents to be in form reasonably satisfactory to
each of the parties; and (iii) use all reasonable best efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purpose of
this Agreement, each party shall take all such necessary action.
(b) Beacon and Beacon Partnership shall use all reasonable best
efforts to obtain from Coopers & Xxxxxxx, LLP, access to all work papers
relating to audits of Beacon and Beacon Partnership performed by Coopers &
Xxxxxxx, LLP, and the continued cooperation of Coopers & Xxxxxxx, LLP, with
regard to the preparation of consolidated financial statements for the Surviving
Trust.
(c) Beacon and Beacon Partnership shall give prompt notice to
EOP and EOP Partnership, and EOP and EOP Partnership shall give prompt notice to
Beacon and Beacon Partnership, (i) if any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becomes untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becomes untrue or inaccurate in any material respect or (ii) of the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.4 Tax Treatment. Each of EOP and Beacon shall use its reasonable
best efforts before and after the Effective Time to cause the Merger to qualify
as a reorganization under the provisions of Sections 368(a) of the Code and to
obtain the opinions of counsel referred to in Sections 6.2(e) and 6.3(e). If,
based upon the advice of counsel, EOP and Beacon determine that the Partnership
Merger could reasonably be expected to create a risk that the Merger would not
qualify as a reorganization under the provisions of Section 368(a) of the Code,
EOP and Beacon undertake to use reasonable best efforts to negotiate and
structure an alternative means to effect the Merger, for EOP to acquire the
interest in Beacon Partnership
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owned by Beacon, and for the holders of Beacon OP Units to receive EOP OP Units
(or the economic and tax equivalent thereof) in exchange for their Beacon OP
Units. EOP Partnership will use the "traditional method" under Treasury
Regulations Section 1.704-3(b) for purposes of making allocations under Section
704(c) of the Code with respect to the properties of or interests in the Beacon
Partnership as of the Effective Time (with no curative allocations of gross
income with respect to depreciation to offset the effects of the "ceiling rule"
but with a curative allocation of gain upon disposition of such properties to
offset the effect of the "ceiling rule"). EOP Partnership and Beacon Partnership
shall negotiate in good faith to agree upon the "Section 704(c) values" of the
properties of Beacon Partnership, effective as of the Closing Date. For purposes
of allocating "excess nonrecourse liabilities" of the EOP Partnership pursuant
to Treasury Regulations Section 1.752-3(a)(3) following the Closing Date, EOP
Partnership shall use a methodology to be agreed upon between EOP Partnership
and Beacon Partnership.
5.5 Public Announcements. Each party will consult with each
other party before issuing, and provide each other the opportunity to review and
comment upon, any press release or other written public statements which address
in any manner the transactions contemplated by this Agreement, and shall not
issue any such press release or make any such written public statement prior to
such consultation, except as may be required by applicable law, court process or
by obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be in the form
agreed to by the parties prior to the execution of this Agreement.
5.6 Listing. EOP shall use all reasonable best efforts to cause
the EOP Common Shares and the EOP Preferred Shares to be issued in the Merger
and the EOP Common Shares reserved for issuance upon redemption of EOP OP Units
issued in the Partnership Merger, to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time.
5.7 Transfer and Gains Taxes. Each party shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added stock transfer and stamp taxes, any transfer, recording,
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interests, penalties or additions to tax, "Transfer and Gains
Taxes"). From and after the Effective Time, EOP shall pay or cause EOP Operating
Partnership, as appropriate, to pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of EOP Common Shares and EOP
Preferred Shares, or EOP OP Units, as applicable, all Transfer and Gains Taxes
(which term shall not in any event be construed to include for these purposes
any tax imposed under the Code).
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5.8 Benefit Plans and Other Employee Arrangements.
(a) Benefit Plans. After the Effective Time, all employees of
Beacon who are employed by the Surviving Trust shall, at the option of the
Surviving Trust, either continue to be eligible to participate in an "employee
benefit plan", as defined in Section 3(3) of ERISA, of Beacon which is, at the
option of the Surviving Trust, continued by the Surviving Trust, or
alternatively shall be eligible to participate in the same manner as other
similarly situated employees of the Surviving Trust who were formerly employees
of EOP in any "employee benefit plan," as defined in Section 3(3) of ERISA,
sponsored or maintained by the Surviving Trust after the Effective Time. With
respect to each such employee benefit plan, service with Beacon or any Beacon
Subsidiary (as applicable) and the predecessor of any of them shall be included
for purposes of determining eligibility to participate, vesting (if applicable)
and entitlement to benefits.
(b) Stock Option Plan. The stock option plan of Beacon shall be
discontinued.
(c) Beacon Stock Options. As of the Effective Time, each
outstanding Beacon Stock Option shall vest and be immediately exercisable, be
assumed by EOP, and be deemed to constitute an option to acquire the same
number of EOP Common Shares as the holder of such Beacon Stock Option would
have been entitled to receive pursuant to the Merger had such holder exercised
such Beacon Stock Option in full immediately prior to the Effective Time at a
price per share equal to the aggregate exercise price for the Beacon Common
Shares subject to such Beacon Stock Option divided by the number of full EOP
Common Shares deemed to be purchasable pursuant to such Beacon Stock Option;
provided, however, that the number of EOP Common Shares that may be purchased
upon exercise of such Beacon Stock Option shall not include any fractional
share and, upon the first such exercise of such Beacon Stock Option, a cash
payment shall be made for any fractional share calculated in accordance with
and in the manner provided for calculations as to be paid in lieu of fractional
shares as part of the Merger Consideration under Section 1.10. All such Beacon
Stock Options held by directors and officers of Beacon above the office of Vice
President shall remain exercisable for one day after the Closing Date and shall
expire at 11:59 p.m., New York time, on the day next business day following
the Closing Date and all such Beacon Stock Options held by persons other than
directors and officers of Beacon above the office of Vice President shall
expire on the six month anniversary of the Closing Date if such person's
employment does not terminate prior to or during such six-month period;
provided, however, that EOP shall use its reasonable best efforts to enable
each person who holds Beacon Stock Options as of the Effective Time and who
exercises (with no requirement to deliver funds or withholding amounts until
settlement) such Beacon Stock Options subsequent to the Effective Time but
prior to 11:59 p.m., New York time, on the next business day following the
Closing Date to receive (other than from EOP or any EOP Subsidiary), within
four (4) business days after the Effective Time, an amount per Beacon Stock
Option equal to the excess, if any, of (A) the closing price of one EOP Common
Share on the New York Stock Exchange (the "NYSE") on the next business day
following the Closing Date, over (B) the sum of (i) the exercise price of such
Beacon Stock Option divided by the Exchange Ratio plus (ii) with respect to
directors and officers of Beacon above the office of Vice President, an amount
equal to any reasonable and customary brokerage commissions payable with
respect to the sale of EOP Common Shares in connection with such option
exercise; and, if EOP is unsuccessful in enabling each
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such person to receive such amount, then such Beacon Stock Option shall not
expire prior to its stated expiration date and EOP shall use its reasonable
best efforts to make other arrangements to enable each such person to receive
the full economic benefit of such amount (provided that neither EOP nor any EOP
Subsidiary shall have any obligation to pay to any such person any amount of
cash or cash equivalents with respect to his or her Beacon Stock Options).
(d) Withholding. To the extent required by applicable law,
Beacon shall require each employee who exercises a Beacon Stock Option or who
receives Beacon Common Shares pursuant to any existing commitment to pay to
Beacon in cash or Beacon Common Shares an amount sufficient to satisfy in full
Beacon's obligation to withhold Taxes incurred by reason of such exercise or
issuance.
5.9 Indemnification.
(a) From and after the Effective Time, EOP and EOP Partnership
(collectively, the "Indemnifying Parties") shall provide exculpation and
indemnification for each person who is now or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer or director
of Beacon or any Beacon Subsidiary (the "Indemnified Parties") which is the same
as the exculpation and indemnification provided to the Indemnified Parties by
Beacon and the Beacon Subsidiaries immediately prior to the Effective Time in
its charter, Bylaws or in its partnership, operating or similar agreement, as in
effect on the date hereof; provided, however, that such exculpation and
indemnification covers actions on or prior to the Effective Time, including,
without limitation, all transactions contemplated by this Agreement.
(b) In addition to the rights provided in Section 5.9(a) above,
in the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including without
limitation, any action by or on behalf of any or all security holders of Beacon
or EOP, or any Beacon Subsidiary or EOP Subsidiary, or by or in the right of
Beacon or EOP, or any Beacon Subsidiary or EOP Subsidiary, or any claim, action,
suit, proceeding or investigation in which any person who is now, or has been,
at any time prior to the date hereof, or who becomes prior to the Effective
Time, an officer, employee or director of Beacon or any Beacon Subsidiary (the
"Indemnification Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to (i)
the fact that he is or was an
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officer, employee or director of Beacon or any of the Beacon Subsidiaries or any
action or omission by such person in his capacity as a director, or (ii) this
Agreement or the transactions contemplated by this Agreement, whether in any
case asserted or arising before or after the Effective Time, EOP, Beacon and the
Indemnified Parties, hereby agree to use their reasonable best efforts to
cooperate in the defense of such claim, action, suit, proceeding or
investigation. The Indemnified Parties shall have the right to select counsel,
subject to the consent of the Indemnifying Parties (which consent shall
not be unreasonably withheld or delayed). It is understood and agreed that,
after the Effective Time, the Indemnifying Parties shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, liabilities, expenses (including
reasonable attorneys' fees and expenses), judgments, fines and amounts paid in
settlement in accordance herewith in connection with any such threatened or
actual claim, action, suit, proceeding or investigation. In addition, after the
Effective Time, in the event of any such threatened or actual claim, action,
suit, proceeding or investigation, the Indemnifying Parties shall promptly pay
and advance reasonable expenses and costs incurred by each Indemnified Person as
they become due and payable in advance of the final disposition of the claim,
action, suit, proceeding or investigation to the fullest extent and in the
manner permitted by law. Notwithstanding the foregoing, the Indemnifying Parties
shall not be obligated to advance any expenses or costs prior to receipt of an
undertaking by or on behalf of the Indemnified Party to repay any expenses
advanced if it shall ultimately be determined that the Indemnified Party is not
entitled to be indemnified against such expense. Notwithstanding anything to the
contrary set forth in this Agreement, the Indemnifying Parties (i) shall not be
liable for any settlement affected without their prior written consent, and (ii)
shall not have any obligation hereunder to any Indemnified Party to the extent
that a court of competent jurisdiction shall determine in a final and
non-appealable order that such indemnification is prohibited by applicable law.
In the event of a final and non-appealable determination by a court that any
payment of expenses is prohibited by applicable law, the Indemnified Person
shall promptly refund to the Indemnifying Parties the amount of all such
expenses theretofore advanced pursuant hereto. Any Indemnified Party wishing to
claim indemnification under this Section 5.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the
Indemnifying Parties of such claim and the relevant facts and circumstances with
respect thereto; provided, however, that the failure to provide such notice
shall not affect the obligations of EOP except to the extent such failure to
notify materially prejudices the Indemnifying Parties ability to defend such
claim, action, suit, proceeding or investigation; and provided, further,
however, that no Indemnified Party shall be obligated to provide any
notification pursuant to this Section 5.9(b) prior to the Effective Time.
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(c) At or prior to the Effective Time, EOP shall purchase
directors' liability insurance policy coverage for Beacon's executive officers
for a period of six years which will provide the directors and officers with
coverage on substantially similar terms as currently provided by Beacon to such
directors and officers. Beacon shall have the right to reasonably review and
approve any such policy, which approval shall not be unreasonably withheld.
(d) This Section 5.9 is intended for the irrevocable benefit of,
and to grant third party rights to, the Indemnified Parties and their
successors, assigns and heirs and shall be binding on all successors and assigns
of EOP. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 5.9 and EOP acknowledges and agrees that
each Indemnified Party would suffer irreparable harm and that no adequate remedy
at law exists for a breach of such covenants and such Indemnified Party shall be
entitled to injunctive relief and specific performance in the event of any
breach of any provision in this Section.
(e) In the event that the Surviving Trust or any of its
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.9, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
5.10 Declaration of Dividends and Distributions. From and after the
date of this Agreement, neither Beacon nor EOP shall make any dividend or
distribution to its shareholders without the prior written consent of the other
party; provided, however, the written consent of the other party shall not be
required for the authorization and payment of quarterly distributions with
respect to the Beacon Common Shares or EOP Common Shares for the dividend for
the third quarter of 1997 and for each quarterly dividend thereafter in an
amount up to the dividend per share paid by it for the second quarter of 1997
(provided that, for purposes of this Section 5.10 only, EOP's dividend per share
paid by it for the second quarter of 1997 shall be deemed to be $.30); provided,
however, the record date for each distribution with respect to the Beacon Common
Shares shall be the same date as the record date for the quarterly distribution
for the EOP Common Shares as provided to Beacon by notice not less than twenty
(20) business days prior to the record date for any quarterly EOP distribution.
From and after the date of this Agreement, Beacon Partnership shall not make any
distribution to the holders of Beacon OP Units except a distribution per Beacon
OP Unit in the same amount as a dividend per Beacon Common Share permitted
pursuant to this Section, with the same record and payment dates as such
dividend on the Beacon Common Shares.
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The foregoing restrictions shall not apply, however, to the extent a
distribution by Beacon or EOP is necessary for Beacon or EOP, as applicable, to
maintain REIT status.
5.11 Transfer of Management Company Shares. At the Closing and
pursuant to the Stock Purchase Agreements, each of the holders of voting capital
stock of the Management Company, Design Company and Construction Company (other
than Beacon Partnership, to the extent it owns any such voting capital stock)
shall transfer to EOP Management Corp. or such person or persons as EOP
Management Corp. shall designate by written notice delivered to them prior to
the Closing, all of the shares of each such Company owned by them, constituting
all the outstanding shares of such companies which are not owned by Beacon
Partnership, for an aggregate consideration in an amount equal to the fair
market value of such shares, as determined in accordance with the provisions of
the Stock Purchase Agreements.
5.12 Notices. EOP shall provide such notice to its preferred
shareholders of the Merger as is required under Maryland law.
5.13 Resignations. On the Closing Date, Beacon shall cause the
directors and officers of each of the Beacon Subsidiaries to submit their
resignations from such positions, effective as of the Effective Time.
5.14 Third Party Management Agreements. Beacon will not, and will
not permit any of its Subsidiaries to, amend the management agreements pursuant
to which Beacon, directly or indirectly, manages buildings in which Beacon does
not own a 100% interest. Beacon will not, and will not permit any Beacon
Subsidiary to, renew such management agreements except on terms which permit its
cancellation by Beacon or the applicable Beacon Subsidiary on thirty days'
notice or less without any charge, penalty or other cost for such cancellation.
5.15 Existing Restrictions on Resale of Certain Beacon Properties.
EOP and EOP Partnership shall assume the obligations of Beacon, Beacon
Partnership or the applicable Beacon Subsidiary, as the case may be, under the
Tax Protection Agreements described in Schedule 2.18(j) to the Beacon Disclosure
Letter.
5.16 Agreement to Hold Certain Properties and Maintain Certain
Indebtedness. EOP and EOP Partnership will enter into agreements with Beacon and
Beacon Partnership, for the benefit of and enforceable by the individuals and
entities set forth in Schedule 5.16 hereto, implementing the principal terms set
forth in Schedule 5.16 hereto, the purpose of which is to permit the individuals
and entities set forth in Schedule 5.16 hereto to defer the recognition of gain
for federal income tax purposes that otherwise would be recognized if certain
properties were to be sold and/or certain outstanding loans were to be repaid.
EOP, EOP Partnership, Beacon and Beacon Partnership agree to negotiate in good
faith the
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specific provisions of such agreements consistent with the principal terms set
forth in Schedule 5.16 hereto and enter into such agreements prior to the
Closing Date.
5.17 RWLP Corp. If requested by EOP Management Corp., Beacon and
Beacon Partnership shall use their reasonable best efforts to (a) cause RWLP
Corp. to sell its interest in Rowes Wharf Limited Partnership to Design Corp.,
Construction Corp. or such other person as may be designated by EOP Management
Corp. for the fair market value thereof at or within two (2) years after the
Effective Time; (b) cause the stockholders of RWLP Corp. to sell all of their
stock of RWLP Corp. to Design Corp., Construction Corp. or such other person as
may be designated by EOP Management Corp. for the fair market value thereof at
or within two (2) years after the Effective Time; and (c) take such other
actions in connection with RWLP Corp. as EOP Management Corp. reasonably may
request, including, without limitation, converting the general partner interest
of RWLP Corp. in Rowes Wharf Limited Partnership into a limited partnership
interest and consenting to the substitution of Design Corp., Construction Corp.,
or such other person as may be designated by EOP Management Corp., as a general
partner of Rowes Wharf Limited Partnership.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations of each party to effect the Mergers and to consummate the other
transactions contemplated by this Agreement to occur on the Closing Date shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) Shareholder and Partner Approvals. This Agreement, the
Mergers and all other matters necessary to consummate the other transactions
contemplated to occur on the Closing Date and the transactions contemplated by
this Agreement shall have been approved and adopted by the Shareholder Approvals
and all required Partner Approvals shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Partnership Merger, the Merger and the transactions
contemplated by the Stock Purchase Agreements under the HSR Act, if applicable
to the Partnership Merger, the Merger and the transactions contemplated by the
Stock Purchase Agreements, shall have expired or been terminated.
(c) Listing of Shares. The NYSE shall have approved for listing
the EOP Common Shares and the EOP Preferred Shares to be issued in the Merger
and the EOP Common Shares reserved for issuance upon redemption of EOP OP Units
issued in the Partnership Merger, subject to official notice of issuance.
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(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject of
any stop order or proceedings by the SEC seeking a stop order.
(e) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers or any of the other transactions contemplated hereby
shall be in effect.
(f) Blue Sky Laws. EOP shall have received all state securities
or "blue sky" permits and other authorizations necessary to issue the EOP Common
Shares, EOP Preferred Shares and EOP OP Units issuable in the Mergers.
6.2 Conditions to Obligations of EOP and EOP Partnership. The
obligations of EOP and EOP Partnership to effect the Mergers and to consummate
the other transactions contemplated to occur on the Closing Date are further
subject to the following conditions, any one or more of which may be waived by
EOP:
(a) Representations and Warranties. The representations and
warranties of Beacon and Beacon Partnership set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, as though made on and as of the Closing Date, except to
the extent such representation or warranty is expressly limited by its terms to
another date, and EOP shall have received a certificate (which certificate may
be qualified by Knowledge to the same extent as the representations and
warranties of Beacon and Beacon Partnership contained herein are so qualified)
signed on behalf of Beacon by the chief executive officer or the chief financial
officer of Beacon, in such capacity, to such effect.
(b) Performance of Obligations of Beacon and Beacon Partnership.
Beacon and Beacon Partnership shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Effective Time, and EOP shall have received a certificate signed on behalf
of Beacon by the chief executive officer or the chief operating officer of
Beacon, in such capacity, to such effect.
(c) Material Adverse Change. Since the date of this Agreement,
there shall have been no Beacon Material Adverse Change and EOP shall have
received a certificate of the chief executive officer or chief operating officer
of Beacon, in such capacity, certifying to such effect.
(d) Tax Opinions Relating to REIT Status and Partnership Status.
EOP shall have received (i) an opinion of Xxxxxxx, Procter & Xxxx LLP or
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other counsel to Beacon reasonably satisfactory to EOP, dated as of the Closing
Date, to the effect that, commencing with its taxable year ended December 31,
1994, (x) Beacon was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code, and (y) Beacon
Partnership has been during and since 1994, and continues to be, treated for
federal income tax purposes as a partnership and not as a corporation or
association taxable as a corporation (with customary exceptions, assumptions and
qualifications and based upon customary representations) and (ii) an opinion of
Xxxxx & Xxxxxxx L.L.P. or other counsel to EOP reasonably satisfactory to
Beacon, dated as of the Closing Date, to the effect that, commencing with its
taxable year ending December 31, 1997, EOP was organized and has operated in
conformity with the requirements for qualification as a REIT under the Code and
that, after giving effect to the Merger, EOP's proposed method of operation will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code (with customary exceptions, assumptions and qualifications
and based upon customary representations and based upon and subject to the
opinion of counsel to Beacon described in clause (i) above).
(e) Tax Opinion Relating to Merger. EOP shall have received an
opinion dated the Closing Date from Xxxxx & Xxxxxxx L.L.P., Xxxxxxxx & Xxxxxxxx
or other counsel reasonably satisfactory to EOP, based upon customary
certificates and letters, which letters and certificates are to be in a form to
be agreed upon by the parties and dated the Closing Date, to the effect that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Code.
(f) Consents. All consents and waivers (including, without
limitation, waivers of rights of first refusal) from third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained, other than such consents and waivers from
third parties, which, if not obtained, would not result, individually or in the
aggregate, in an EOP Material Adverse Effect or a Beacon Material Adverse
Effect.
(g) "Comfort" Letter. EOP and EOP Partnership shall have
received a "comfort" letter from Coopers & Xxxxxxx, LLP, as described in Section
5.1(b).
(h) Shares of the Management, Design and Construction Companies.
All of the voting shares of the Management Company, the Design Company and the
Construction Company (other than any such shares owned by Beacon Partnership)
shall have been transferred to EOP Management Corp., or its designees or
assigns, in accordance with the Stock Purchase Agreements.
6.3 Conditions to Obligations of Beacon and Beacon Partnership. The
obligations of Beacon and Beacon Partnership to effect the Mergers and to
consummate the other transactions contemplated to occur on the Closing Date is
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further subject to the following conditions, any one or more of which may be
waived by Beacon:
(a) Representations and Warranties. The representations and
warranties of EOP and EOP Partnership set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date, as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and Beacon shall have received a certificate (which certificate
may be qualified by Knowledge to the same extent as such representations and
warranties of EOP and EOP Partnership contained herein are so qualified) signed
on behalf of EOP by the chief executive officer or the chief financial officer
of such party, in such capacity, to such effect.
(b) Performance of Obligations of EOP and EOP Partnership. EOP
and EOP Partnership shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Effective Time, and Beacon shall have received a certificate of EOP signed
on behalf of EOP by the chief executive officer or the chief financial officer
of EOP, in such capacity, to such effect.
(c) Material Adverse Change. Since the date of this Agreement,
there shall have been no EOP Material Adverse Change and Beacon shall have
received a certificate of the chief executive officer or chief financial officer
of EOP, in such capacity, certifying to such effect.
(d) Tax Opinions Relating to REIT Status and Partnership Status.
Beacon shall have received an opinion of Xxxxx & Xxxxxxx L.L.P. or other counsel
to EOP, reasonably satisfactory to Beacon, dated as of the Closing Date, that,
commencing with its taxable year ended December 31, 1997, (i) EOP was organized
and has operated in conformity with the requirements for qualification as a REIT
under the Code and (ii) EOP Operating Partnership has been during and since
1997, and continues to be, treated for federal income tax purposes as a
partnership and not as a corporation or association taxable as a corporation
(with customary exceptions, assumptions and qualifications and based upon
customary representations).
(e) Tax Opinion Relating to Merger. Beacon shall have received
an opinion dated the Closing Date from Xxxxxxx, Procter & Xxxx LLP, Xxxxxxxx &
Xxxxxxxx or other counsel reasonably satisfactory to Beacon, based upon
customary certificates and letters, which letters and certificates are to be in
a form to be agreed upon by the parties and dated the Closing Date, to the
effect that the Merger will qualify as a reorganization under the provisions of
Section 368(a) of the Code.
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(f) Consents. All consents and waivers (including, without
limitation, waivers or rights of first refusal) from third parties necessary in
connection with the consummation of the transactions contemplated hereby shall
have been obtained, other than such consents and waivers from third parties,
which, if not obtained, would not result, individually or in the aggregate, in
an EOP Material Adverse Effect or a Beacon Material Adverse Effect.
(g) "Comfort" Letter. Beacon and Beacon Partnership shall have
received a "comfort" letter from Ernst & Young LLP, as described in Section
5.1(b).
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior
to the filing of the Articles of Merger with the Department, whether before or
after either of the Shareholder Approvals or the Beacon Unitholder Approvals are
obtained:
(a) by mutual written consent duly authorized by the Board of
Trustees of EOP and the Board of Directors of Beacon;
(b) by EOP, upon a breach of any representation, warranty,
covenant, obligation or agreement on the part of Beacon or Beacon Partnership
set forth in this Agreement, or if any representation or warranty of Beacon or
Beacon Partnership shall become untrue, in either case such that the conditions
set forth in Section 6.2(a) or Section 6.2(b), as the case may be, would be
incapable of being satisfied by April 15, 1998 (or as otherwise extended);
(c) by Beacon, upon a breach of any representation, warranty,
covenant obligation or agreement on the part of EOP or EOP Partnership set forth
in this Agreement, or if any representation or warranty of EOP or EOP
Partnership shall become untrue, in either case such that the conditions set
forth in Section 6.3(a) or Section 6.3(b), as the case may be, would be
incapable of being satisfied by April 15, 1998 (or as otherwise extended);
(d) by either EOP or Beacon, if any judgment, injunction, order,
decree or action by any Governmental Entity of competent authority preventing
the consummation of the Merger shall have become final and non-appealable;
(e) by either EOP or Beacon, if the Merger shall not have been
consummated before April 15, 1998; provided, however, that a party may not
terminate pursuant to this clause (e) if the terminating party shall have
breached
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in any material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the occurrence of the failure referred to
in this clause;
(f) by either EOP or Beacon (unless Beacon or Beacon Partnership
is in breach of its obligations under Section 5.1) if, upon a vote at a duly
held Beacon Shareholders Meeting or any adjournment thereof, the Beacon
Shareholder Approvals shall not have been obtained as contemplated by Section
5.1 (excluding Section 5.1(d));
(g) by either Beacon or EOP (unless EOP or EOP Partnership is in
breach of its obligations under Section 5.1 (excluding Section 5.1(d)) if, upon
a vote at a duly held EOP Shareholders Meeting or any adjournment thereof, the
EOP Shareholder Approvals shall not have been obtained as contemplated by
Section 5.1 (excluding Section 5.1(d));
(h) by Beacon, if prior to the Beacon Shareholders Meeting, the
Board of Directors of Beacon shall have withdrawn or modified in any manner
adverse to EOP its approval or recommendation of the Merger or this Agreement in
connection with, or approved or recommended, a Superior Acquisition Proposal;
provided, however, that such termination shall not be effective prior to the
payment of the Break-Up Fee to the extent required by Section 7.2;
(i) by EOP, if (A) prior to the Beacon Shareholders Meeting, the
Board of Directors of Beacon shall have withdrawn or modified in any manner
adverse to EOP its approval or recommendation of the Merger or this Agreement in
connection with, or approved or recommended, any Superior Acquisition Proposal,
(B) Beacon shall have entered into any agreement for any Acquisition Proposal,
or (C) the Board of Directors of Beacon or any committee thereof shall have
resolved to do any of the foregoing; and
(j) by Beacon at any time during the seven (7) trading day
period following the Pricing Period (as defined below) if the Average Closing
Price (as defined below) shall be less than Twenty-Seven Dollars and Thirty-Nine
Cents ($27.39). If Beacon elects to exercise its termination right pursuant to
this Section 7.1(j), it shall give written notice to EOP (provided that such
notice of election to terminate may be withdrawn at any time within the
aforementioned seven (7) trading day period). For purposes of this Section
7.1(j), (i) the term "Average Closing Price" means the average of the closing
prices of EOP Common Stock, on the New York Stock Exchange for all trading days
during the Pricing Period, and (ii) "Pricing Period" means the period of twenty
(20) consecutive trading days commencing on the twenty-seventh (27th) trading
day prior to the date of the Beacon Shareholders Meeting.
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7.2 Certain Fees and Expenses. If this Agreement shall be terminated
(i) pursuant to Section 7.1(h) or 7.1(i), then Beacon and Beacon Partnership
thereupon shall pay to EOP Partnership (provided that Beacon was not entitled to
terminate this Agreement pursuant to Section 7.1(c) at the time of such
termination) a fee equal to the Break-Up Fee (as defined below), and (ii)
pursuant to Section 7.1(b) (subject to the proviso in the final sentence of
Section 2.8) or 7.1(f), then Beacon and Beacon Partnership shall pay to EOP
Partnership (provided that Beacon was not entitled to terminate this Agreement
pursuant to Section 7.1(c) at the time of such termination) an amount equal to
the Break-Up Expenses (as defined below). If this Agreement shall be terminated
pursuant to Section 7.1(c) or 7.1(g), then EOP and EOP Partnership shall pay
Beacon Partnership (provided that EOP was not entitled to terminate this
Agreement pursuant to Section 7.1(b) at the time of such termination) an amount
equal to the Break-Up Expenses. If this Agreement shall be terminated pursuant
to Section 7.1(b), 7.1(d) (if primarily resulting from any action or inaction of
Beacon or any Beacon Subsidiary), 7.1(e), 7.1(f) or 7.1(j) and prior to the time
of such termination an Acquisition Proposal has been received by Beacon or any
Beacon Subsidiary, and either prior to the termination of this Agreement or
within twelve (12) months thereafter, Beacon or any Beacon Subsidiary enters
into any written Acquisition Proposal which is subsequently consummated (whether
or not any such Acquisition Proposal is the same Acquisition Proposal which had
been received at the time of the termination of this Agreement), then Beacon and
Beacon Partnership shall pay the Break-Up Fee to EOP Partnership. If prior to
the Beacon Shareholders Meeting the Board of Directors of Beacon shall have
withdrawn or modified in any manner adverse to EOP its approval or
recommendation of the Merger or this Agreement and, within twelve (12) months
after termination of this Agreement, Beacon or Beacon Partnership enters into
any written Acquisition Proposal which is subsequently consummated (whether or
not any Acquisition Proposal had been received prior to the time of the
termination of this Agreement), then Beacon and Beacon Partnership shall pay the
Break-Up Fee to EOP Partnership. If this Agreement shall be terminated pursuant
to Section 7.1(j) and within six (6) months thereafter, Beacon or any Beacon
Subsidiary enters into any written Acquisition Proposal which is subsequently
consummated (whether or not any Acquisition Proposal had been received at the
time of the termination of this Agreement), then Beacon and Beacon Partnership
shall pay the Break-Up Fee to EOP Partnership. The payment of the Break-Up Fee
shall be compensation for the loss suffered by EOP and EOP Partnership as a
result of the failure of the Mergers to be consummated (including, without
limitation, opportunity costs and out-of-pocket costs and expenses) and to avoid
the difficulty of determining damages under the circumstances. The Break-Up Fee
shall be paid by Beacon and Beacon Partnership to EOP Partnership, or the
Break-Up Expenses shall be paid by Beacon and Beacon Partnership to EOP
Partnership or EOP Partnership to Beacon Partnership (as applicable), in
immediately available funds within fifteen (15) calendar days after the date the
event giving rise to the obligation to make such payment occurred (except as
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otherwise provided in Section 7.1(h)). As used in this Agreement, "Break-Up Fee"
shall be an amount equal to the lesser of (i) $75,000,000 less Break-Up Expenses
paid or payable under this Section 7.2 (the "Base Amount") and (ii) the sum of
(A) the maximum amount that can be paid to EOP Partnership without causing EOP
to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code
determined as if the payment of such amount did not constitute income described
in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying
Income"), as determined by independent accountants to EOP, and (B) in the event
EOP receives a letter from outside counsel (the "Break-Up Fee Tax Opinion")
indicating that EOP has received a ruling from the IRS holding that EOP
Partnership's receipt of the Base Amount would either constitute Qualifying
Income or would be excluded from gross income of EOP within the meaning of
Sections 856(c)(2) and (3) of the Code (the "REIT Requirements") or that the
receipt by EOP Partnership of the remaining balance of the Base Amount following
the receipt of and pursuant to such ruling would not be deemed constructively
received prior thereto, the Base Amount less the amount payable under clause (A)
above. Beacon's and Beacon Partnership's obligation to pay any unpaid portion of
the Break-Up Fee shall terminate three years from the date of this Agreement. In
the event that EOP Partnership is not able to receive the full Base Amount,
Beacon and Beacon Partnership shall place the unpaid amount in escrow and shall
not release any portion thereof to EOP Partnership unless and until Beacon
receives either one of the following: (i) a letter from EOP's independent
accountants indicating the maximum amount that can be paid at that time to EOP
Partnership without causing EOP to fail to meet the REIT Requirements or (ii) a
Break-Up Fee Tax Opinion, in either of which events Beacon and Beacon
Partnership shall pay to EOP Partnership the lesser of the unpaid Base Amount or
the maximum amount stated in the letter referred to in (i) above. The "Break-Up
Expenses" payable to EOP Partnership or Beacon Partnership, as the case may be
(the "Recipient"), shall be an amount equal to the lesser of (i) $10,000,000,
(ii) the Recipient's out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, all attorneys', accountants' and investment bankers' fees and
expenses) or (iii) the sum of (A) the maximum amount that can be paid to the
Recipient without causing EOP or Beacon, as the case may be, to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code determined as if the
payment of such amount did not constitute Qualifying Income, as determined by
independent accountants to the EOP or Beacon, as the case may be, and (B) in the
event EOP or Beacon, as the case may be, receives a Break-Up Fee Tax Opinion
indicating that it has received a ruling from the IRS holding that the
Recipient's receipt of the Break-Up Expenses would either constitute Qualifying
Income or would be excluded from gross income of EOP or Beacon, as the case may
be, within the meaning of the REIT Requirements or that receipt by the Recipient
of the remaining balance of the Break-Up Expenses following the receipt of and
pursuant to such ruling would not be deemed constructively received prior
thereto, the Break-Up Expenses less the amount payable under clause (A) above.
The obligation of EOP and EOP
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Partnership or Beacon and Beacon Partnership, as applicable ("Payor"), to pay
any unpaid portion of the Break-Up Expenses shall terminate three years from the
date of this Agreement. In the event that the Recipient is not able to receive
the full Break-Up Expenses, the Payor shall place the unpaid amount in escrow
and shall not release any portion thereof to the Recipient unless and until the
Payor receives either one of the following: (i) a letter from the independent
accountants of EOP or Beacon, as the case may be, indicating the maximum amount
that can be paid at that time to the Recipient without causing it to fail to
meet the REIT Requirements or (ii) a Break-Up Expense Tax Opinion, in either of
which events the Payor shall pay to the Recipient the lesser of the unpaid
Break-Up Expenses or the maximum amount stated in the letter referred to in (i)
above.
7.3 Effect of Termination. In the event of termination of this
Agreement by either Beacon or EOP as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of EOP, EOP Partnership, Beacon or Beacon Partnership,
other than the last sentence of Section 5.2, Section 7.2, this Section 7.3 and
Article 8, and except to the extent that such termination results from a
material breach by any party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
7.4 Amendment. This Agreement may be amended by the parties in
writing by action of the respective Board of Trustees or Board of Directors of
EOP and Beacon at any time before or after any Shareholder Approvals are
obtained and prior to the filing of the Articles of Merger with the Department;
provided, however, that, after the Shareholder Approvals and Partner Approvals
are obtained, no such amendment, modification or supplement shall be made which
by law requires the further approval of shareholders without obtaining such
further approval. The parties agree to amend this Agreement in the manner
provided in the immediately preceding sentence to the extent required to (a)
continue the status of each party as a REIT or (b) preserve the Merger as a
tax-free reorganization under Section 368 of the Code.
7.5 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.4, waive compliance with any of the agreements or conditions of the other
party contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
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ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement confirming the representations and warranties in this
Agreement shall survive the Effective Time. This Section 8.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to EOP, to:
Equity Office Properties Trust
Xxx Xxxxx Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, President
Xxxxxxx X. Xxxxxxx, Chief Counsel
Fax No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: J. Xxxxxx Xxxxxxx, Xx., Esq.
Xxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
(b) if to Beacon, to:
Beacon Properties Corporation
00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Fax.: (000) 000-0000
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with a copy to:
Xxxxxxx Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, P.C.
Xxxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
All notices shall be deemed given only when actually received.
8.3 Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
8.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Beacon Disclosure Letter, the EOP Disclosure Letter, the Confidentiality
Agreement, the Voting Agreements and the other agreements entered into in
connection with the Mergers (a) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral (including,
without limitation, in connection with the form of this Agreement executed on
September 15, 1997) between the parties with respect to the subject matter of
this Agreement and (b) except as provided in Section 1.7, 1.11, 5.8, 5.9, 5.15,
5.16, and 8.10 ("Third Party Provisions"), are not intended to confer upon any
person other than the parties hereto any rights or remedies. The Third Party
Provisions may be enforced by the beneficiaries thereof or on behalf of the
beneficiaries thereof by the directors of Beacon who had been members of the
Board of Directors of Beacon prior to the Effective Time.
8.6 Governing Law. THE PARTNERSHIP MERGER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF. EXCEPT AS PROVIDED IN THE IMMEDIATELY PRECEDING SENTENCE, THIS
AGREEMENT SHALL BE GOVERNED BY,
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AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND, REGARDLESS
OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT
OF LAWS THEREOF.
8.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
8.8 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in
Maryland or in any state court located in Maryland this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself (without making such
submission exclusive) to the personal jurisdiction of any federal court located
in Maryland or any state court located in Maryland in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.
8.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.10 EOP Extension Option. Notwithstanding anything to the contrary
in Sections 5.1(c), 7.1(b) or 7.1(e), in the event of any preliminary, temporary
or other nonfinal judgment, injunction, order, decree or action by any court
(each an "Action") preventing, delaying or otherwise materially adversely
affecting the consummation of either of the Mergers primarily resulting from any
action or inaction of Beacon, EOP shall have the right, in its sole and absolute
discretion, by giving written notice to Beacon, to preclude Beacon (for one or
more periods aggregating not more than six (6) months) from terminating this
Agreement pursuant to Section 7.1(e) or 7.1(h) (unless, in the case of Section
7.1(h), the Board
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of Directors of Beacon shall have acted in the circumstances described in
Section 7.1(h) without basing its decision in any way, directly or indirectly,
on the Action), for the period of such prevention, delay or material adverse
effect plus fifteen (15) days, in which event each of the dates referred to in
Sections 5.1(c), 7.1(b) or 7.1(e) shall be extended for each such period.
8.11 Exculpation. This Agreement shall not impose any personal
liability on any shareholder, trustee, officer, employee or agent of EOP, and
all Persons shall look solely to the property of EOP for the payment of any
claim hereunder or for the performance of this Agreement.
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IN WITNESS WHEREOF, EOP, EOP Partnership, Beacon and Beacon
Partnership have caused this Agreement to be signed by their respective officers
(or general partners) thereunto duly authorized all as of the date first written
above.
EQUITY OFFICE PROPERTIES TRUST
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------------
Title: President and CEO
------------------------------
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties
Trust, its managing general
partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------------
Title: President and CEO
------------------------------
BEACON PROPERTIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------
Title: Executive Vice President
------------------------------
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------
Title: Executive Vice President
------------------------------
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SCHEDULE 5.16
PRINCIPAL TERMS OF TAX PROTECTION AGREEMENTS
ONE POST OFFICE SQUARE
- One Post Office Square Beneficiaries: Xxxxxx X. Xxxxxxxxx, Xxxx X.
Xxxxxxxxx, Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxxxxx, Xxxxxxxx Beacon L.P. and its partners (Xxxxxxx Xxxxxxxx and
Xxxxxxxxx Xxxxxxxx), Xxxxxxxx Selkovitz, and The Xxxxxxxxx Family L.P. and
its partners (who include Xxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxxxxx).
- Lockout Period: Ten Years from Closing Date. One Post Office Square
Beneficiaries have the unilateral right at any time during such 10-year
period to extend the term for another 10 years upon the payment of
$125,000 in cash to EOP Partnership.
- Sale Restrictions: EOP Partnership would agree not to undertake, or
consent to or otherwise permit, any sale or other disposition, directly or
indirectly, of part or all of the One Post Office Square Property (which
term also includes any property received in exchange for the One Post
Office Square Property in a permitted like-kind exchange or other
non-recognition transaction described below) if such disposition would
result in the recognition and allocation of any gain for federal income
tax purposes to a One Post Office Square Beneficiary pursuant to Section
704(c) of the Code.
- Such agreement shall not prohibit (i) a transfer
of the One Post Office Square Property in a like-kind exchange
pursuant to Section 1031 of the Code or in any other
transaction that pursuant to a non-recognition provision in
the Code that does not result in the current recognition of
any gain (including depreciation recapture) to a Post Office
Square Beneficiary; and (ii) sales or transfers of building
components necessary, in EOP Partnership's reasonable
judgment, for the ongoing operation of the Xxx Xxxx Xxxxxx
Xxxxxx Xxxxxxxx.
- Xxxx Xxxxxxxxxxxx: EOP Partnership would agree to cause the One Post
Office Square Partnership to maintain the existing non-recourse
indebtedness, in the approximate amount of $94 million (the "Existing Post
Office Square Debt"), in place during the term of Lockout Period, as it
may be extended as set forth above, subject to reduction for required
amortization payments in accordance with the terms of the Existing Post
Office Square Debt. At the maturity of the Existing Post Office Square
Debt, EOP Partnership shall use commercially reasonable efforts to cause
the One Post Office Square Partnership to obtain replacement financing
that qualifies as a "nonrecourse liability" for purposes of Treas. Reg.
Section 1.752-1(a)(2) in an amount equal to the then outstanding balance
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of the Existing Post Office Square Debt (or, if less, the maximum amount
of such debt then available to the Post Office Square Partnership on
commercially reasonable terms), with such replacement financing to provide
for the least amount of principal amortization as is available on
commercially reasonable terms.
- EOP Partnership would have the right to refinance the Existing
Post Office Square Debt (or any replacement debt obtained
therefor) at any time, subject to the same terms and
conditions set forth in the preceding paragraph and subject to
the additional condition that, unless such refinancing occurs
within one year of the maturity of the Existing Post Office
Square Debt (or any replacement debt previously obtained
therefor), the principal amount of the new replacement
financing cannot be less than the outstanding balance of the
Existing Post Office Square Debt (or any replacement debt
previously obtained therefor) at the time of the refinancing.
- Notwithstanding the above, in the event EOP Partnership does
not maintain sufficient debt to avoid recognition of any gain
for federal income tax purposes to a One Post Office Square
Beneficiary, EOP Partnership shall pay to each such One Post
Office Square Beneficiary in cash an amount equal to the
aggregate federal, Massachusetts and local income taxes that
are payable by such One Post Office Square Beneficiary with
respect to such gain, plus a full gross up for federal,
Massachusetts and local taxes payable by such Beneficiary as
the result of the Receipt of such payment.
- Optional Termination: EOP Partnership would have the right to
terminate all of these restrictions at any time by paying to each of
the One Post Office Square Beneficiaries in cash an amount equal to the
aggregate federal, Massachusetts and local income taxes that would have
been payable by such One Post Office Square Beneficiary if the One Post
Office Square Property were sold for the "Section 704(c)" value of the
Property on the Closing Date, plus a full gross up for the federal,
Massachusetts, and local taxes payable by such Beneficiary as the
result of the Receipt of such payment.
CENTER PLAZA
- Center Plaza Beneficiaries: Beneficiaries of Partnership Holding
Trust ("PHT"), who are RLCPA Corp., Scollay Corp., Xxxxxx Xxxx, trustee
of Xxxxxx Xxxxxxxxx Trust dated 6/3/66, Xxxxxx X. Xxxxxxxxx, Xxxx X.
Xxxxxxxxx, Xxxx X. Xxxxxxxxx, and Xxxxx X. Xxxxxx.
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- Lockout Period: Ten Years from Closing Date. Center Plaza Beneficiaries
have the unilateral right at any time during such 10-year period to extend
the term for another 10 years upon the payment of $125,000 in cash to EOP
Partnership.
- Sale and Option Exercise Restrictions: EOP Partnership would agree (i)
not to exercise, or cause or permit any Subsidiary to exercise the option
to purchase PHT's interest in Center Plaza Associates and (ii) not to
undertake, or consent to or otherwise permit, any sale or other
disposition, directly or indirectly, of part or all of the Center Plaza
Property (which term also includes any property received in exchange for
the Center Plaza Property in a permitted like-kind exchange or other
non-recognition transaction described below) if such disposition would
result in the recognition and allocation of any gain for federal income
tax purposes to a Center Plaza Beneficiaries pursuant to Section 704(c) of
the Code.
- Such agreement shall not prohibit (i) a transfer of the Center
Plaza Property in a like-kind exchange pursuant to Section
1031 of the Code or in any other transaction that pursuant to
a non-recognition provision in the Code that does not result
in the current recognition of any gain (including depreciation
recapture) to a Center Plaza Beneficiary; and (ii) sales or
transfers of building components necessary, in EOP
Partnership's reasonable judgment, for the ongoing operation
of the Center Plaza Property.
- Debt Restrictions: In the event that EOP Partnership or any Subsidiary
of EOP Partnership exercises the option (as such option may be bifurcated
prior to the Closing Date) to purchase the Center Plaza Associates note
from Note Holding Trust, EOP Partnership would agree (i) to cause the
Center Plaza Associates to put into place and thereafter maintain not less
than $43 million of third party non-recourse debt secured by the Center
Plaza Property (the "Replacement Financing"), and (ii) to permit PHT
and/or the beneficiaries of PHT to guarantee up to $43 million of the
Replacement Financing, in such amount as they may select, on a "bottom
guarantee" basis (that is, with liability against the guarantors only if,
after full recourse to all of the assets securing such debt, the lender
has recovered less than the guaranteed amount). At the maturity of any
such Replacement Financing, EOP Partnership shall use commercially
reasonable efforts to cause Center Plaza Associates to obtain new
replacement financing, on the terms set forth above, in an equal to the
outstanding balance of the Replacement Financing (or, if less, the maximum
amount of such debt then available to the Center Plaza Associates on
commercially reasonable terms), with such replacement financing to provide
for the least amount of principal amortization as is available on
commercially reasonable terms.
- EOP Partnership would have the right to refinance
the Replacement Financing (or any replacement debt previously
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obtained therefor) at any time, subject to the same terms and
conditions set forth in the preceding paragraph and subject to
the additional condition that, unless such refinancing occurs
within one year of the maturity of the Replacement Financing
(or any replacement debt previously obtained therefor), the
principal amount of the new replacement financing cannot be
less than the outstanding guarantees by PHT (or the PHT
beneficiaries) at the time of the refinancing.
- Notwithstanding the above, in the event EOP Partnership does
not maintain sufficient debt to avoid recognition of any gain
for federal income tax purposes to a Center Plaza Beneficiary,
EOP Partnership shall pay to each such Center Plaza
Beneficiary in cash an amount equal to the aggregate federal,
Massachusetts and local income taxes that are payable by such
Center Plaza Beneficiary with respect to such gain, plus a
full gross up for the federal, Massachusetts and local taxes
payable by such Beneficiary as the result of the Receipt of
such payment.
- Optional Cash Termination: EOP Partnership would have the right to
terminate all of these restrictions at any time by paying to each of the
Center Plaza Beneficiaries in cash an amount equal to the aggregate
federal, Massachusetts and local income taxes that would have been payable
by such Center Plaza Beneficiary if the Center Plaza Property were sold
for the "Section 704(c)" value of the Property on the Closing Date (which
will be the outstanding balance of the debt with respect to the Property
on that date), plus a full gross up for the federal, Massachusetts, and
local taxes payable by such Beneficiary as the result of the receipt of
such payment.
- Optional Property Termination: EOP Partnership would have the right,
exercisable at any time after June 1, 1999, to terminate all of these
restrictions at any time by offering to redeem the interest of PHT in
Center Plaza Associates for property designated by the PHT Beneficiaries.
In the event that EOP Partnership shall deliver notice of the exercise of
its optional property termination right, the PHT Beneficiaries thereafter
would have the option, by written notice to EOP Partnership within 15 days
after the notice from EOP Partnership, to require that Center Plaza
Associates redeem their partnership interests with property to be selected
by the PHT Beneficiaries (in their sole discretion) and acquired by Center
Plaza Associates (the "PHT Designated Replacement Property"), subject to
the following conditions. If the PHT Beneficiaries fail to designate the
replacement property within the specified 15 day period or thereafter fail
to complete the redemption of their interests as contemplated herein
within 90 days for any reason other than a
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change in law, as described below, all restrictions with respect to Center
Plaza Associates shall terminate.
The PHT Designated Replacement Property shall have such value and be subject to
such debt as shall be designated by the PHT Beneficiaries, provided that
neither Center Plaza nor EOP Partnership shall be required in any event to
expend more than $25,000 in excess of the amount of the designated debt in
connection with the acquisition and delivery of the PHT Designated Replacement
Property to the PHT Beneficiaries. PHT and the PHT Beneficiaries shall provide
any credit support necessary to obtain the level of debt that they request with
respect to the PHT Designated Replacement Property.
- The rights of EOP Partnership to cause the optional property
termination shall cease if PHT shall deliver to EOP
Partnership an opinion of nationally recognized tax counsel to
the effect that, as a result of a change in federal income tax
law occurring after the date of this Agreement, the delivery
of the designated replacement property (in a form other than
cash or marketable securities) subject to debt in an amount
equal to the negative capital accounts of PHT and the PHT
Beneficiaries that is fully recourse to the PHT Beneficiaries,
would not be effective to permit PHT Beneficiaries to defer
the recognition of gain that otherwise would result if they
were to dispose of their interests in Center Plaza Associates
in a fully taxable transaction.
- Tax Returns: Unless otherwise agreed to by PHT, EOP Partnership shall
cause Coopers & Xxxxxxx to prepare the partnership tax returns for tax
years through and including the year in which an optional property
termination occurs.
XXXXX XXXXX XXXXXXX XXXXXXXXXXX
- Xxxxx Xxxxx Beneficiaries: Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxx, Xxxx
X. Xxxxxxxxx, Xxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxx,
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxx, Estate of Xxxxxx X.
XxXxxxxxx, RWLP Corp., and Xxxxxxxx Beacon L.P. and its partners (Xxxxxxx
Xxxxxxxx and Xxxxxxxxx Xxxxxxxx).
- Consent to Transaction: Notwithstanding any of the restrictions in the
Agreement to the contrary, EOP Partnership consents to a redemption, prior
to the Closing Date, by the Rowes Wharf Limited Partnership, of the
interests of the Rowes Wharf Beneficiaries in Rowes Wharf Limited
Partnership for property to be selected by the Rowes Wharf Beneficiaries
(excluding the interest in Rowes Wharf Associates) and approved by EOP
Partnership (such approval not to be unreasonably withhold), subject to
the condition that the Rowes Wharf
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Beneficiaries assume (and hold the Rowes Wharf Limited Partnership
harmless for) debt in an amount equal to the cost of such property to
Rowes Wharf Limited Partnership, which debt shall be incurred by Rowes
Wharf Partnership for the purpose of acquiring such property and
delivering it to the Rowes Wharf Beneficiaries.
- Tax Returns: Unless otherwise agreed to by the Rowes Wharf Beneficiaries,
EOP Partnership shall cause Coopers & Xxxxxxx to prepare the partnership
tax returns for tax years 1997 and 1998 for Rowes Wharf Associates and
Rowes Wharf Limited Partnership.
XXXXXX XXXXXXXXX LOAN GUARANTEE
- Beneficiary: Xxxxxx Xxxxxxxxx
- Term: Lifetime of Xxxxxx Xxxxxxxxx
- Option to Guarantee Debt: EOP Partnership shall make available to Xxxxxx
Xxxxxxxxx, commencing on the closing date and continuing for his lifetime,
the opportunity to guaranty $1.5 million of outstanding indebtedness of
EOP Partnership.
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EXHIBIT A
ARTICLES OF MERGER
MERGING
BEACON PROPERTIES CORPORATION
(A MARYLAND CORPORATION)
INTO
EQUITY OFFICE PROPERTIES TRUST
(A MARYLAND REAL ESTATE INVESTMENT TRUST)
FIRST: Equity Office Properties Trust, a Maryland real estate
investment trust ("EOP" or the "Surviving Trust"), and Beacon Properties
Corporation ("Beacon"), a Maryland corporation, each agree that Beacon will
merge with and into EOP (the "Merger") pursuant to the Agreement and Plan of
Merger between EOP, EOP Operating Limited Partnership, a Delaware limited
partnership ("EOP Partnership"), Beacon and Beacon Properties, L.P., a Delaware
limited partnership ("Beacon Partnership"), dated as of September 15, 1997 (the
"Merger Agreement").
SECOND: EOP will survive the Merger and will continue under the name
Equity Office Properties Trust.
THIRD: The principal office of Beacon in Maryland is located in
________ County. Beacon does not own any interest in land in the State of
Maryland. The principal office of the Surviving Trust in Maryland is located
in ________ County. EOP does not own any interest in land in the State of
Maryland.
FOURTH: The terms and conditions of the Merger as set forth in these
Articles of Merger were advised, authorized and approved by Beacon, in the
manner and by the vote required by its charter and the laws of Maryland, as
follows:
(a) At a meeting of the Board of Directors held on
September 14, 1997, the Board of Directors adopted a
resolution approving the Merger and recommending that the
proposed Merger be submitted for consideration by the
stockholders.
(b) At a special meeting of the stockholders held on
_______ __, 1998, the stockholders duly approved the Merger by
the
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affirmative vote of the holders of two-thirds (2/3) of the shares
of common stock, par value $.01 per share, entitled to vote
thereon.
FIFTH: The terms and conditions of the Merger as set forth in these
Articles of Merger were advised, authorized and approved by EOP, in the manner
and by the vote required by its declaration of trust and the laws of
Maryland, as follows:
(a) At a meeting of the Board of Trustees held on September __, 1997,
the Board of Trustees adopted a resolution approving the Merger
and recommending that the proposed Merger be submitted for
consideration by the shareholders.
(b) At a special meeting of the shareholders held on _______ __, 1998,
the shareholders duly approved the Merger by the affirmative vote
of the holders of a majority of the common shares of beneficial
interest, $.01 par value per share, entitled to vote thereon.
SIXTH: The declaration of trust of the Surviving Trust will be amended
as set forth in the Articles Supplementary filed concurrently herewith.
SEVENTH: The total number of shares of all classes which each party to
these Articles of Merger has authority to issue and the number of each class
are as follows:
(a) EOP.
The total number of shares of beneficial interest of all classes
which EOP has authority to issue is 850,000,000, consisting of:
750,000,000 common shares of beneficial interest, $.01 par value
per share; and 100,000,000 preferred shares of beneficial
interest, $.01 par value per share. The aggregate par value of
the shares of beneficial interest of all classes of EOP is
$8,500,000.
(b) Beacon.
The total number of shares of stock of all classes which Beacon
has authority to issue is 175,000,000, consisting of: 100,000,000
shares of common stock, par value $.01 per share; 25,000,000
shares of preferred stock, par value $.01 per share; and
50,000,000 shares of excess common stock, par value $.01 per
share. The aggregate par value of the shares of all classes of
stock of Beacon is $1,750,000.
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EIGHTH: The manner and basis of converting or exchanging issued and
outstanding stock of Beacon into different shares of beneficial interest in the
Surviving Trust or other consideration and the treatment of any issued and
outstanding stock of the merging entities not to be so converted or exchanged
is as follows:
(a) Effective Time. The Merger shall become effective for state
law purposes upon the later of: (i) the issuance of a certificate
of merger by the State Department of Assessments and Taxation of
Maryland in accordance with the Maryland General Corporation Law
("MGCL") and (ii) at __________ _.m., ____________ __, 1998, which
effective time is immediately prior to the effective time of the
merger of Beacon Partnership into EOP Partnership pursuant to the
Merger Agreement (the time the Merger becomes effective being the
"Effective Time").
(b) Effects of the Merger. The Merger shall have the effects set
forth in the MGCL.
(c) Conversion of Common Stock. Upon the Effective Time, each
issued and outstanding share of common stock of Beacon ("Beacon
Common Share") shall be converted into the right to receive from
EOP 1.4063 fully paid and nonassessable common shares of
beneficial interest of EOP, $.01 par value per share ("EOP Common
Shares"). As of the Effective Time, all Beacon Common Shares
shall no longer be outstanding and shall automatically be canceled
and retired and all rights with respect thereto shall cease to
exist, and each holder of a certificate representing any Beacon
Common Share shall cease to have any rights with respect thereto,
except the right to receive, upon surrender of such certificate in
accordance with the applicable provision of the Merger Agreement,
certificates representing the shares of EOP Common Shares required
to be delivered under this paragraph (c) and any dividends or
other distributions with a record date prior to the Effective Time
which may have been declared or made by Beacon on such Beacon
Common Shares which remain unpaid at the Effective Time.
(d) Conversion of Preferred Stock. Upon the Effective Time,
each issued and outstanding share of 8.98% Series A Cumulative
Redeemable preferred stock, liquidation preference $25.00 per
share, of Beacon ("Beacon Preferred Share") shall be converted
into the right to receive from EOP one 8.98% Series A Cumulative
Redeemable preferred share of beneficial interest,
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liquidation preference $25.00 per share, of EOP ("EOP Preferred
Share"). As of the Effective Time, all Beacon Preferred Shares
shall no longer be outstanding and shall automatically be canceled
and retired and all rights with respect thereto shall cease to
exist, and each holder of a certificate representing any Beacon
Preferred Share shall cease to have any rights with respect
thereto, except the right to receive, upon surrender of such
certificate in accordance with the applicable provision of the
Merger Agreement, certificates representing the EOP Preferred
Shares required to be delivered under this paragraph (d) and any
dividends or other distributions with a record date prior to the
Effective Time which may have been declared or made by Beacon on
such Beacon Preferred Shares which remain unpaid at the Effective
Time.
(e) No Fractional Shares.
(i) No certificates or scrip representing
fractional EOP Common Shares shall be issued upon the
surrender for exchange of certificates, and such
fractional share interests will not entitle the owner
thereof to vote, to receive dividends or to any other
rights of a shareholder of EOP.
(ii) No fractional EOP Common Shares shall
be issued pursuant to the Merger. In lieu of the
issuance of any fractional EOP Common Shares pursuant to
the Merger, each holder of Beacon Common Shares upon
surrender of a certificate for exchange shall be paid an
amount in cash (without interest), rounded to the
nearest cent, determined by multiplying (i) the average
closing price of one EOP Common Share on the New York
Stock Exchange on the five trading days immediately
preceding the closing date by (ii) the fractional amount
of one EOP Common Share which such holder would
otherwise be entitled to receive.
(f) EOP Common Shares-. Upon the Effective Time, each common
share of beneficial interest of EOP outstanding immediately
prior to the Effective Time shall remain outstanding and
shall represent one validly issued, fully paid and
nonassessable common share of beneficial interest of EOP.
NINTH: Each undersigned Trustee of EOP, representing a majority of the
Trustees of EOP, and the undersigned President of Beacon acknowledges these
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Articles of Merger to be the act of the respective party on whose behalf he
has signed, and further, as to all matters or facts required to be verified
under oath, each of __________, President of EOP and ______________, President
of Beacon acknowledges, that to the best of his knowledge, information and
belief, these matters and facts relating to the entity on whose behalf he has
signed are true in all material respects and that this statement is made under
the penalties for perjury.
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IN WITNESS WHEREOF, these Articles of Merger have been duly executed by
the parties hereto as of the ___ day of ________________, 1997.
EOP
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
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By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
Attest:
Name:
---------------------------------
Title: Secretary
BEACON
By:
---------------------------------
Name:
Title:
Attest:
Name:
---------------------------------
Title: Secretary
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EXHIBIT B
CERTIFICATE OF MERGER
OF
BEACON PROPERTIES, L.P.
INTO
EOP OPERATING LIMITED PARTNERSHIP
The undersigned limited partnership, organized and existing under and by
virtue of the Delaware Revised Uniform Limited Partnership Act, does hereby
certify:
FIRST: That the name and jurisdiction of formation of each of the
constituent limited partnerships which is to merge is as follows:
Name State of Formation
---- ------------------
EOP Operating Limited Partnership Delaware
Beacon Properties, L.P. Delaware
SECOND: That an Agreement and Plan of Merger dated as of September 15,
1997 (the "Merger Agreement") by and among Equity Office Properties Trust, a
Maryland real estate investment trust ("EOP"), EOP Operating Limited
Partnership, Beacon Properties Corporation, a Maryland corporation ("Beacon"),
and Beacon Properties, L.P. has been approved and executed by each of the
constituent limited partnerships in accordance with the requirements of Section
17-211(b) of the Delaware Revised Uniform Limited Partnership Act.
THIRD: That the name of the surviving limited partnership is EOP
Operating Limited Partnership (the "Surviving Limited Partnership").
FOURTH: That the effective time of the merger is upon the filing of this
Certificate of Merger with the Secretary of State of the State of Delaware,
which effective time is immediately after the effective time of the merger of
Beacon into EOP pursuant to the Merger Agreement.
FIFTH: That the executed Merger Agreement is on file at a place of
business of the Surviving Limited Partnership. The address of such place of
business is Xxx Xxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
SIXTH: That a copy of the Merger Agreement will be furnished by the
Surviving Limited Partnership, on request and without cost, to any partner of
the constituent limited partnerships.
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IN WITNESS WHEREOF, Equity Office Properties Trust, the Managing General
Partner of EOP Operating Limited Partnership has caused this Certificate of
Merger to be signed by a duly authorized officer, this ________ day of
_______________ 1997.
EOP OPERATING LIMITED
PARTNERSHIP
By: Equity Office Properties Trust,
Its Managing General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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