As filed with the Securities and Exchange Commission on August 5, 2002
Registration Statement No. 333-92402
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BOSTON PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2473675
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number
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111 Huntington Avenue, Suite 300
Boston, Massachusetts 02199-7610
(617) 236-3300
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
Mortimer B. Zuckerman, Chairman
Edward H. Linde, President and Chief Executive Officer
BOSTON PROPERTIES, INC.
111 Huntington Avenue, Suite 300
Boston Massachusetts 02199-7610
(617) 236-3300
(Name, address, including zip code, and telephone number,
including area code of agent for service)
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Copy to:
GILBERT G. MENNA, P.C.
ETTORE A. SANTUCCI, P.C.
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts 02109
(617) 570-1000
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. __
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. _X_
If this Form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ___
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion. Dated August 5, 2002.
Prospectus
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1,066,229 Shares of Common Stock
BOSTON PROPERTIES, INC.
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The selling stockholders identified in this prospectus, and any of their
pledgees, donees, transferees or other successors in interest, may offer to sell
up to an aggregate of 1,066,229 shares of common stock of Boston Properties,
Inc. We are filing the registration statement of which this prospectus is a part
at this time to fulfill a contractual obligation to do so. We will not receive
any of the proceeds from the sale of the common stock by the selling
stockholders.
Our common stock is listed on the New York Stock Exchange under the symbol
"BXP."
See "Risk Factors" on page 4 for factors you should consider before you
invest in our common stock.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. It is illegal for any person to tell
you otherwise.
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The date of this prospectus is [ ].
PROSPECTUS SUMMARY
This summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. As this is a
summary, it may not contain all information that is important to you. You should
read this entire prospectus carefully before deciding whether to invest in our
common stock.
Unless the context otherwise requires, all references to "we," "us" or "our
company" in this prospectus refer collectively to Boston Properties, Inc., a
Delaware corporation, and its subsidiaries, including Boston Properties Limited
Partnership, a Delaware limited partnership, and their respective predecessor
entities for the applicable periods, considered as a single enterprise.
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About Boston Properties, Inc.
We are a fully-integrated, self-administered and self-managed real estate
investment trust or "REIT" and one of the largest owners and developers of
office properties in the United States. We conduct substantially all our
business through our affiliate, Boston Properties Limited Partnership, in which
we are the sole general partner and hold a controlling economic interest.
Our properties are concentrated in four core markets--Boston, midtown
Manhattan, Washington, D.C. and San Francisco. We have full-service offices in
Boston, New York, Washington, D.C., San Francisco and Princeton, New Jersey, and
achieve efficiencies of scale by operating a centralized financial control and
data center at our Boston headquarters that is responsible for operating
budgets, billing and payments for all of our existing and development
properties.
We were formed to succeed to the real estate development, redevelopment,
acquisition, operating and leasing businesses associated with a predecessor
company founded by Messrs. Mortimer B. Zuckerman and Edward H. Linde in 1970. We
believe that we have created significant value for our tenants and investors by
developing well located properties that meet the demands of today's office
tenants, redeveloping underperforming assets, and continuously improving the
marketing and management of our assets.
Additional information regarding Boston Properties, including our audited
financial statements and descriptions of Boston Properties, is contained in the
documents incorporated by reference in this prospectus. See "Where You Can Find
More Information" on page 18.
2
The Offering
This prospectus relates to up to 1,066,229 shares of our common stock that
may be offered for sale by the selling stockholders. We are registering the
common stock covered by this prospectus in order to fulfill our contractual
obligations under our registration rights agreements with the selling
stockholders. Registration of the common stock does not necessarily mean that
all or any portion of the common stock covered by this prospectus will be
offered for sale by the selling stockholders.
We have agreed to register the common stock under federal securities laws,
but we will not receive any proceeds from the sale of any common stock offered
under this prospectus.
Tax Status of Boston Properties, Inc.
We have elected to qualify as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code. As long as we qualify for taxation
as a real estate investment trust, we generally will not be subject to federal
income tax on that portion of our ordinary income and capital gains that is
currently distributed to our stockholders. Even if we qualify for taxation as a
real estate investment trust, we may be subject to state and local taxes on our
income and property and to federal income and excise taxes on our undistributed
income.
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RISK FACTORS
Before you purchase shares of our common stock from the selling
stockholders you should be aware that there are risks in making an investment in
our common stock, including those described below. You should carefully consider
these risk factors together with all of the information included or incorporated
by reference in this prospectus before you decide to purchase shares of our
common stock. This section contains some forward-looking statements. You should
refer to the explanation of the qualifications and limitations on
forward-looking statements beginning on page 20.
Our performance and value are subject to risks associated with our real estate
assets and with the real estate industry.
Our economic performance and the value of our real estate assets, and
consequently the value of our securities, are subject to the risk that if our
office, industrial, and hotel properties do not generate revenues sufficient to
meet our operating expenses, including debt service and capital expenditures,
our cash flow and ability to pay distributions to our securityholders will be
adversely affected. The following factors, among others, may adversely affect
the revenues generated by our office, industrial and hotel properties:
o downturns in the national, regional and local economic climate;
o competition from other office, hotel and other commercial buildings;
o local real estate market conditions, such as oversupply or reduction
in demand for office, hotel or other commercial space;
o changes in interest rates and availability of financing;
o vacancies, changes in market rental rates and the need to periodically
repair, renovate and relet space;
o increased operating costs, including insurance premiums, utilities,
real estate taxes, and heightened security costs;
o civil disturbances, earthquakes and other natural disasters, or
terrorist acts or acts of war which may result in uninsured or
underinsured losses;
o significant expenditures associated with each investment, such as debt
service payments, real estate taxes, insurance and maintenance costs
which are generally not reduced when circumstances cause a reduction
in revenues from a property; and
o ability to collect rents from tenants.
We are dependent upon the economic climates of our four core markets--Boston,
Washington, D.C., midtown Manhattan and San Francisco.
A majority of our revenues are derived from properties located in our four
core markets: Boston, Washington, D.C., midtown Manhattan and San Francisco. As
a result of the current slowdown in economic activity, there has been an
increase in vacancy rates for office properties in these markets. A prolonged
downturn in the economies of these markets, or the impact that a downturn in the
overall national economy may have upon these economies, could result in further
reduced demand for office space. Because our portfolio consists primarily of
office buildings (as compared to a more diversified real estate portfolio), a
decrease in demand for office space in turn
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could adversely affect our results from operations. Additionally, there are
submarkets within our core markets that are dependent upon a limited number of
industries. A significant downturn in one or more of these industries could also
adversely affect our results of operations.
Our investment in property development may be more costly than anticipated.
We have a significant development pipeline and intend to continue to
develop and substantially renovate office, industrial and hotel properties. Our
current and future development and construction activities may be exposed to the
following risks:
o we may be unable to proceed with the development of properties because
we cannot obtain financing on favorable terms;
o we may incur construction costs for a development project which exceed
our original estimates due to increased materials, labor or other
costs, which could make completion of the project uneconomical because
we may not be able to increase rents to compensate for the increase in
construction costs;
o we may be unable to obtain, or face delays in obtaining, required
zoning, land-use, building, occupancy, and other governmental permits
and authorizations, which could result in increased costs and could
require us to abandon our activities entirely with respect to a
project;
o we may abandon development opportunities after we begin to explore
them and as a result we may fail to recover expenses already incurred;
o we may expend funds on and devote management's time to projects which
we do not complete;
o we may be unable to complete construction and leasing of a property on
schedule, resulting in increased debt service expense and construction
or renovation costs;
o we may lease developed properties at below expected rental rates; and
o occupancy rates and rents at newly completed properties may fluctuate
depending on a number of factors, including market and economic
conditions, and may result in our investment not being profitable.
Our use of joint ventures may limit our flexibility with jointly owned
investments.
In appropriate circumstances, we intend to develop and acquire properties
in joint ventures with other persons or entities when circumstances warrant the
use of these structures. We could become engaged in a dispute with any of our
joint venturers. In addition, our joint venture partners may have different
objectives from us regarding the appropriate timing and pricing of any sale or
refinancing of properties.
In 2000, we entered into a joint venture with the New York State Common
Retirement Fund which has agreed to contribute up to $270 million to acquire and
develop properties with us. During the three-year investment period for this
joint venture ending in May 2003, the New York State Common Retirement Fund has
the right to participate in all of our acquisition opportunities that meet
agreed criteria and any development projects that we choose to pursue with an
institutional partner.
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We face risks associated with property acquisitions.
Since our initial public offering, we have made acquisitions of large
properties and portfolios of properties. We intend to continue to acquire
properties and portfolios of properties, including large portfolios that could
continue to significantly increase our size and result in altering our capital
structure. Our acquisition activities and their success are subject to the
following risks:
o we may be unable to acquire a desired property because of competition
from other well capitalized real estate investors, including both
publicly traded real estate investment trusts and institutional
investment funds;
o even if we enter into an acquisition agreement for a property, it is
usually subject to customary conditions to closing, including
completion of due diligence investigations to our satisfaction, which
may not be satisfied;
o even if we are able to acquire a desired property, competition from
other real estate investors may significantly increase the purchase
price;
o we may be unable to finance acquisitions on favorable terms;
o acquired properties may fail to perform as expected;
o our estimates of the costs of repositioning or redeveloping acquired
properties may be lower than actual costs;
o acquired properties may be located in new markets where we may face
risks associated with a lack of market knowledge or understanding of
the local economy, lack of business relationships in the area and
unfamiliarity with local governmental and permitting procedures; and
o we may be unable to quickly and efficiently integrate new
acquisitions, particularly acquisitions of portfolios of properties,
into our existing operations, and as a result our results of
operations and financial condition could be adversely affected.
We may acquire properties subject to liabilities and without any recourse,
or with only limited recourse, with respect to unknown liabilities. As a result,
if liability were asserted against us based upon ownership of those properties,
we might have to pay substantial sums to settle it, which could adversely affect
our cash flow. Unknown liabilities with respect to properties acquired might
include:
o liabilities for clean-up of undisclosed environmental contamination;
o claims by tenants, vendors or other persons against the former owners
of the properties;
o liabilities incurred in the ordinary course of business; and
o claims for indemnification by general partners, directors, officers
and others indemnified by the former owners of the properties.
We face potential difficulties or delays renewing leases or re-leasing space.
We derive most of our income from rent received from our tenants. If a
tenant experiences a downturn in its business or other types of financial
distress, it may be unable to make timely rental payments. Also, when our
tenants decide not to renew their leases, we may not be able to relet the space.
Even if tenants decide to renew, the terms of renewals or new leases, including
the cost of
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required renovations or concessions to tenants, may be less favorable than
current lease terms. As a result, our cash flow could decrease and our ability
to make distributions to our securityholders could be adversely affected.
We face potential adverse effects from major tenants' bankruptcies or
insolvencies.
The bankruptcy or insolvency of a major tenant may adversely affect the
income produced by our properties. Although we have not experienced material
losses from tenant bankruptcies or insolvencies in the past, our tenants could
file for bankruptcy protection or become insolvent in the future. We cannot
evict a tenant solely because of its bankruptcy. On the other hand, a court
might authorize the tenant to reject and terminate its lease with us. In such
case, our claim against the bankrupt tenant for unpaid, future rent would be
subject to a statutory cap that might be substantially less than the remaining
rent actually owed under the lease, and, even so, our claim for unpaid rent
would likely not be paid in full. This shortfall could adversely affect our cash
flow and results of operations.
We may have difficulty selling our properties which may limit our flexibility.
Large and high quality office, industrial and hotel properties like the
ones that we own can be hard to sell, especially if local market conditions are
poor. This may limit our ability to change our portfolio promptly in response to
changes in economic or other conditions. In addition, federal tax laws limit our
ability to sell properties that we have owned for fewer than four years, and
this may affect our ability to sell properties without adversely affecting
returns to our securityholders. These restrictions reduce our ability to respond
to changes in the performance of our investments and could adversely affect our
financial condition and results of operations.
Our properties face significant competition.
We face significant competition from developers, owners and operators of
office, industrial and other commercial real estate. Substantially all of our
properties face competition from similar properties in the same market. Such
competition may affect our ability to attract and retain tenants and may reduce
the rents we are able to charge. These competing properties may have vacancy
rates higher than our properties, which may result in their owners being willing
to make space available at lower prices than the space in our properties.
Because we own three hotel properties, we face the risks associated with the
hospitality industry.
We own three hotel properties which we lease to our taxable REIT
subsidiary. Boston Properties Limited Partnership, as lessor, is entitled to a
percentage of the gross receipts of our hotel properties and Marriott
International, Inc. manages our hotel properties under the Marriott(R) name
pursuant to a management contract with the lessee.
Because the lease payments we receive under the leases are based on a
participation in the gross receipts of the hotels, if the hotels do not generate
sufficient receipts, our cash flow would be decreased, which could reduce the
amount of cash available for distribution to our securityholders. The following
factors, among others, are common to the hotel industry, and may reduce the
receipts generated by our hotel properties:
o our hotel properties compete for guests with other hotels, a number of
which have greater marketing and financial resources than our
hotel-operating business partners;
o if there is an increase in operating costs resulting from inflation
and other factors, our hotel-operating business partners may not be
able to offset such increase by increasing room rates;
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o our hotel properties are subject to the fluctuating and seasonal
demands of business travelers and tourism;
o our hotel properties are subject to general and local economic
conditions that may affect demand for travel in general; and
o we cannot predict the magnitude and duration of the decline in
business and vacation travel in the aftermath of the terrorist attacks
of September 11, 2001, which has adversely affected the revenues and
cash flow from our hotels.
In addition, we may modify the structure for owning our hotel properties in
response to changes in applicable tax laws and any such modification could
adversely affect the receipts generated by our hotel properties.
Compliance or failure to comply with the Americans with Disabilities Act and
other similar laws could result in substantial costs.
The Americans with Disabilities Act generally requires that public
buildings, including office buildings and hotels, be made accessible to disabled
persons. Noncompliance could result in the imposition of fines by the federal
government or the award of damages to private litigants. If, pursuant to the
Americans with Disabilities Act, we are required to make substantial alterations
and capital expenditures in one or more of our properties, including the removal
of access barriers, it could adversely affect our financial condition and
results of operations, as well as the amount of cash available for distribution
to our securityholders.
We may also incur significant costs complying with other regulations. Our
properties are subject to various federal, state and local regulatory
requirements, such as state and local fire and life safety requirements. If we
fail to comply with these requirements, we could incur fines or private damage
awards. We believe that our properties are currently in material compliance with
all of these regulatory requirements. However, we do not know whether existing
requirements will change or whether compliance with future requirements will
require significant unanticipated expenditures that will affect our cash flow
and results of operations.
Some potential losses are not covered by insurance.
We carry insurance coverage on our properties of types and in amounts that
we believe are in line with coverage customarily obtained by owners of similar
properties. We believe all of our properties are adequately insured. The
property insurance that we maintain for our properties has historically been on
an "all risk" basis, including losses caused by acts of terrorism. However,
following the recent terrorist activity of September 11, 2001, and in light of
the resulting uncertainty in the insurance market, many insurance companies have
indicated that they will exclude insurance against acts of terrorism from their
"all risk" policies. Our "all risk" insurance coverage in place for the current
policy year contains specific exclusions for losses attributable to acts of
terrorism. We have secured, on a portfolio-wide basis, terrorism insurance in
the amount of $250 million on a per occurrence and annual aggregate basis.
Higher coverage amounts and coverage for bio-terrorism continue to be
unavailable on commercially reasonable terms or, in some cases, at all. Further,
there are other types of losses, such as from wars or catastrophic acts of
nature, for which we cannot obtain insurance at all or at a reasonable cost. In
the event of an uninsured loss or a loss in excess of our insurance limits, we
could lose both the revenues generated from the affected property and the
capital we have invested in the affected property; depending on the specific
circumstances of the affected property it is possible that we could be liable
for any mortgage indebtedness or other obligations related to the property. Any
such loss could materially and adversely affect our business and financial
condition and results of operations.
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We carry earthquake insurance on our properties located in areas known to
be subject to earthquakes in an amount and subject to deductibles and
self-insurance that we believe are commercially reasonable. However, the amount
of our earthquake insurance coverage may not be sufficient to cover losses from
earthquakes. As a result of increased costs of coverage and decreased
availability, the amount of third party earthquake insurance we have been able
to purchase in the marketplace upon commercially reasonable terms has been
reduced. In addition, we may discontinue earthquake insurance on some or all of
our properties in the future if the premiums exceed our estimation of the value
of the coverage. If we experience a loss that is uninsured or that exceeds
policy limits, we could lose the capital invested in the damaged properties as
well as the anticipated future revenue from those properties. Any such loss
could materially and adversely affect our business and financial condition and
results from operations.
Potential liability for environmental contamination could result in substantial
costs.
Under federal, state and local environmental laws, ordinances and
regulations, we may be required to investigate and clean up the effects of
releases of hazardous or toxic substances or petroleum products at our
properties simply because of our current or past ownership or operation of the
real estate. If unidentified environmental problems arise, we may have to make
substantial payments which could adversely affect our cash flow and our ability
to make distributions to our securityholders because:
o as owner or operator we may have to pay for property damage and for
investigation and clean-up costs incurred in connection with the
contamination;
o the law typically imposes clean-up responsibility and liability
regardless of whether the owner or operator knew of or caused the
contamination;
o even if more than one person may be responsible for the contamination,
each person who shares legal liability under the environmental laws
may be held responsible for all of the clean-up costs; and
o governmental entities and third parties may sue the owner or operator
of a contaminated site for damages and costs.
These costs could be substantial and in extreme cases could exceed the
value of the contaminated property. The presence of hazardous or toxic
substances or petroleum products or the failure to properly remediate
contamination may materially and adversely affect our ability to borrow against,
sell or rent an affected property. In addition, applicable environmental laws
create liens on contaminated sites in favor of the government for damages and
costs it incurs in connection with a contamination.
Environmental laws also govern the presence, maintenance and removal of
asbestos. Such laws require that owners or operators of buildings containing
asbestos:
o properly manage and maintain the asbestos;
o notify and train those who may come into contact with asbestos; and
o undertake special precautions, including removal or other abatement,
if asbestos would be disturbed during renovation or demolition of a
building.
Such laws may impose fines and penalties on building owners or operators who
fail to comply with these requirements and may allow third parties to seek
recovery from owners or operators for personal injury associated with exposure
to asbestos fibers. Some of our properties are located in
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urban, industrial and previously developed areas where fill or current or
historic industrial uses of the areas have caused site contamination.
It is our policy to retain independent environmental consultants to conduct
Phase I environmental site assessments and asbestos surveys with respect to our
acquisition of properties. These assessments generally include a visual
inspection of the properties and the surrounding areas, an examination of
current and historical uses of the properties and the surrounding areas and a
review of relevant state, federal and historical documents, but do not involve
invasive techniques such as soil and ground water sampling. Where appropriate,
on a property-by-property basis, our practice is to have these consultants
conduct additional testing, including sampling for asbestos, for lead in
drinking water, for soil contamination where underground storage tanks are or
were located or where other past site usages create a potential environmental
problem, and for contamination in groundwater. Even though these environmental
assessments are conducted, there is still the risk that:
o the environmental assessments and updates did not identify all
potential environmental liabilities;
o a prior owner created a material environmental condition that is not
known to us or the independent consultants preparing the assessments;
o new environmental liabilities have developed since the environmental
assessments were conducted; and
o future uses or conditions such as changes in applicable environmental
laws and regulations could result in environmental liability for us.
We face risks associated with the use of debt to fund acquisitions and
developments, including refinancing risk.
We are subject to the risks normally associated with debt financing,
including the risk that our cash flow will be insufficient to meet required
payments of principal and interest. We anticipate that only a small portion of
the principal of our debt will be repaid prior to maturity. Therefore, we are
likely to need to refinance at least a portion of our outstanding debt as it
matures. There is a risk that we may not be able to refinance existing debt or
that the terms of any refinancing will not be as favorable as the terms of our
existing debt. If principal payments due at maturity cannot be refinanced,
extended or repaid with proceeds from other sources, such as new equity capital,
our cash flow will not be sufficient to repay all maturing debt in years when
significant "balloon" payments come due.
Rising interest rates would increase our interest costs on variable rate debt.
We currently have, and may incur more, indebtedness that bears interest at
variable rates. Accordingly, if interest rates increase, so will our interest
costs, which would adversely affect our cash flow and our ability to pay
principal and interest on our debt and our ability to make distributions to our
securityholders. As a protection against rising interest rates, we enter into
agreements such as interest rate swaps, caps, floors and other interest rate
exchange contracts. These agreements, however, increase our risks that other
parties to the agreements will not perform or that the agreements will be
unenforceable.
We have no corporate limitation on the amount of debt we can incur.
Our management and board of directors have discretion under our certificate
of incorporation and bylaws to increase the amount of our outstanding debt. Our
decisions with regard to the incurrence and maintenance of debt are based on
available investment opportunities for which
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capital is required, the cost of debt in relation to such investment
opportunities, whether secured or unsecured debt is available, the effect of
additional debt on existing financial ratios and the maturity of the proposed
new debt relative to maturities of existing debt. We could become more highly
leveraged, resulting in increased debt service costs that could adversely affect
our cash flow and the amount available for payment of dividends. If we increase
our debt we may also increase the risk we will be unable to repay our debt.
Covenants in our debt agreements could adversely affect our financial condition.
The mortgages on our properties contain customary negative covenants such
as those that limit our ability, without the prior consent of the lender, to
further mortgage the applicable property or to discontinue insurance coverage.
Our credit facilities contain customary restrictions, requirements and other
limitations on our ability to incur indebtedness, including total debt to asset
ratios, secured debt to total asset ratios, debt service coverage ratios and
minimum ratios of unencumbered assets to unsecured debt which we must maintain.
Our ability to borrow under our credit facilities is subject to compliance with
our financial and other covenants.
Our current year's insurance policies contain an exclusion for acts of
terrorism and some of our lenders may take the position that our insurance
coverage no longer complies with covenants in our debt agreements. If a lender
takes this position, they may attempt to claim an event of default under the
applicable debt agreement. Additionally, in the future our ability to obtain
debt financing secured by individual properties, or the terms of such financing,
may be adversely affected if lenders generally insist upon insurance against
acts of terrorism and such coverage is not available upon commercially
reasonable terms.
We rely on borrowings under our credit facilities to finance acquisitions
and development activities and for working capital. If we are unable to borrow
under our credit facilities, or to refinance existing indebtedness our financial
condition and results of operations would likely be adversely affected. If we
breach covenants in our debt agreements, the lender can declare a default and,
if the debt is secured, can take possession of the property securing the loan.
In addition, our credit facilities are cross-defaulted to our other
indebtedness, which would give the lenders under our credit facilities the right
also to declare a default.
Our degree of leverage could limit our ability to obtain additional financing or
affect the market price of our common stock.
Debt to market capitalization ratio is a measure of our total debt as a
percentage of the aggregate of our total debt plus the market value of our
outstanding common stock and interests in Boston Properties Limited Partnership.
Our debt to market capitalization ratio was approximately 46.9% as of June
30,2002. To the extent that our board of directors uses our debt to market
capitalization ratio as a measure of appropriate leverage, the total amount of
our debt could increase as our common stock price increases, even if we may not
have a corresponding increase in our ability to service or repay the debt. Our
degree of leverage could affect our ability to obtain additional financing for
working capital, capital expenditures, acquisitions, development or other
general corporate purposes. Our degree of leverage could also make us more
vulnerable to a downturn in business or the economy generally. There is a risk
that changes in our debt to market capitalization ratio, which is in part a
function of our stock price, or our ratio of indebtedness to other measures of
asset value used by financial analysts may have an adverse effect on the market
price of our common stock.
Further issuances of equity securities may be dilutive to current
securityholders.
The interests of our existing securityholders could be diluted if
additional equity securities are issued to finance future developments and
acquisitions instead of incurring additional debt. Our ability to execute our
business strategy depends on our access to an appropriate blend of debt
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financing, including unsecured lines of credit and other forms of secured and
unsecured debt, and equity financing, including common and preferred equity.
Failure to qualify as a real estate investment trust would cause us to be taxed
as a corporation, which would substantially reduce funds available for payment
of dividends.
If we fail to qualify as a real estate investment trust for federal income
tax purposes, we will be taxed as a corporation. We believe that we are
organized and qualified as a real estate investment trust, and intend to operate
in a manner that will allow us to continue to qualify as a real estate
investment trust. However, we cannot assure you that we are qualified as such,
or that we will remain qualified as such in the future. This is because
qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue Code as to which
there are only limited judicial and administrative interpretations, and involves
the determination of facts and circumstances not entirely within our control. In
addition, future legislation, new regulations, administrative interpretations or
court decisions may significantly change the tax laws or the application of the
tax laws with respect to qualification as a real estate investment trust for
federal income tax purposes or the federal income tax consequences of such
qualification.
If we fail to qualify as a real estate investment trust we will face
serious tax consequences that will substantially reduce the funds available for
payment of dividends for each of the years involved because:
o we would not be allowed a deduction for dividends paid to stockholders
in computing our taxable income and would be subject to federal income
tax at regular corporate rates;
o we also could be subject to the federal alternative minimum tax and
possibly increased state and local taxes;
o unless we are entitled to relief under statutory provisions, we could
not elect to be subject to tax as a real estate investment trust for
four taxable years following the year during which we were
disqualified; and
o all dividends will be subject to tax as ordinary income to the extent
of our current and accumulated earnings and profits.
In addition, if we fail to qualify as a real estate investment trust, we
will no longer be required to pay dividends. As a result of all these factors,
our failure to qualify as a real estate investment trust could impair our
ability to expand our business and raise capital, and would adversely affect the
value of our common stock.
In order to maintain our real estate investment trust status, we may be forced
to borrow funds on a short-term basis during unfavorable market conditions.
In order to maintain our real estate investment trust status, we may need
to borrow funds on a short-term basis to meet the real estate investment trust
distribution requirements, even if the then prevailing market conditions are not
favorable for these borrowings. To qualify as a real estate investment trust, we
generally must distribute to our stockholders at least 90% of our net taxable
income each year, excluding capital gains. In addition, we will be subject to a
4% nondeductible excise tax on the amount, if any, by which dividends paid by us
in any calendar year are less than the sum of 85% of our ordinary income, 95% of
our capital gain net income and 100% of our undistributed income from prior
years. We may need short-term debt to fund required distributions as a result of
differences in timing between the actual receipt of income and the recognition
of
12
income for federal income tax purposes, or the effect of non-deductible capital
expenditures, the creation of reserves or required debt or amortization
payments.
Limits on changes in control may discourage takeover attempts beneficial to
stockholders.
Provisions in our certificate of incorporation and bylaws, our shareholder
rights agreement and the limited partnership agreement of Boston Properties
Limited Partnership, as well as provisions of the Internal Revenue Code and
Delaware corporate law, may:
o delay or prevent a change of control over us or a tender offer, even
if such action might be beneficial to our stockholders; and
o limit our stockholders' opportunity to receive a potential premium for
their shares of common stock over then-prevailing market prices.
Stock Ownership Limit
Primarily to facilitate maintenance of our qualification as a real estate
investment trust, our certificate of incorporation generally prohibits
ownership, directly, indirectly or beneficially, by any single stockholder of
more than 6.6% of the number of outstanding shares of any class or series of our
equity stock. We refer to this limitation as the "ownership limit." Our board of
directors may waive or modify the ownership limit with respect to one or more
persons if it is satisfied that ownership in excess of this limit will not
jeopardize our status as a real estate investment trust for federal income tax
purposes. In addition, under our certificate of incorporation each of Messrs.
Zuckerman and Linde, along with their respective families and affiliates, as
well as, in general, pension plans and mutual funds, may actually and
beneficially own up to 15% of the number of outstanding shares of any class or
series of our equity common stock. Shares owned in violation of the ownership
limit will be subject to the loss of rights to distributions and voting and
other penalties. The ownership limit may have the effect of inhibiting or
impeding a change in control.
Boston Properties Limited Partnership Agreement
We have agreed in the limited partnership agreement of Boston Properties
Limited Partnership not to engage in business combinations unless limited
partners of Boston Properties Limited Partnership other than Boston Properties,
Inc. receive, or have the opportunity to receive, the same consideration for
their partnership interests as holders of our common stock in the transaction.
If these limited partners do not receive such consideration, we cannot engage in
the transaction unless 75% of these limited partners vote to approve the
transaction. In addition, we have agreed in the limited partnership agreement of
Boston Properties Limited Partnership that we will not consummate business
combinations in which we received the approval of our stockholders unless these
limited partners are also allowed to vote and the transaction would have been
approved had these limited partners been able to vote as stockholders on the
transaction. Therefore, if our stockholders approve a business combination that
requires a vote of stockholders, the partnership agreement requires the
following before we can consummate the transaction:
o holders of interests in Boston Properties Limited Partnership
(including Boston Properties, Inc.) must vote on the matter;
o Boston Properties, Inc. must vote its partnership interests in the
same proportion as our stockholders voted on the transaction; and
o the result of the vote of holders of interests in Boston Properties
Limited Partnership must be such that had such vote been a vote of
stockholders, the business combination would have been approved.
13
As a result of these provisions, a potential acquirer may be deterred from
making an acquisition proposal and we may be prohibited by contract from
engaging in a proposed business combination even though our stockholders approve
of the combination.
Shareholder Rights Plan
We have adopted a shareholder rights plan. Under the terms of this plan, we
can in effect prevent a person or group from acquiring more than 15% of the
outstanding shares of our common stock, because, unless we approve of the
acquisition, after the person acquires more than 15% of our outstanding common
stock, all other stockholders will have the right to purchase securities from us
at a price that is less than their then fair market value, which would
substantially reduce the value and influence of the stock owned by the acquiring
person. Our board of directors can prevent the plan from operating by approving
of the transaction, which gives us significant power to approve or disapprove of
the efforts of a person or group to acquire a large interest in our company.
We may change our policies without obtaining the approval of our stockholders.
Our operating and financial policies, including our policies with respect
to acquisitions, growth, operations, indebtedness, capitalization and dividends,
are determined by our board of directors. Accordingly, as a stockholder, you
will have little direct control over these policies.
Our success depends on key personnel whose continued service is not guaranteed.
We depend on the efforts of key personnel, particularly Mortimer B.
Zuckerman, Chairman of our board of directors, and Edward H. Linde, our
President and Chief Executive Officer. Among the reasons that Messrs. Zuckerman
and Linde are important to our success is that each has a national reputation
which attracts business and investment opportunities and assists us in
negotiations with lenders. If we lost their services, our relationships with
lenders, potential tenants and industry personnel would diminish.
Our other executive officers who serve as managers of our offices have
strong regional reputations. Their reputations aid us in identifying
opportunities, having opportunities brought to us, and negotiating with tenants
and build-to-suit prospects. While we believe that we could find replacements
for these key personnel, the loss of their services could materially and
adversely affect our operations because of diminished relationships with
lenders, prospective tenants and industry personnel.
Mr. Zuckerman has substantial outside business interests, including serving
as a trustee for New York University, a trustee of Memorial Sloan-Kettering
Cancer Institute, a trustee of the Institute for Advanced Studies at Princeton
and a member of the Council on Foreign Relations and the International Institute
for Strategic Studies. He is currently serving as the Chairman of the Conference
of Presidents of Major Jewish Organizations. He is also Chairman and
Editor-in-Chief of U.S. News & World Report, Chairman and Co-Publisher of the
New York Daily News and Chairman of the Board of Applied Graphics Technologies.
He is a member of the Chase Manhattan Corporation National Advisory Board, and a
member of the Board of Directors of Loews Cineplex and WNET/Channel Thirteen.
Such outside business interests could interfere with his ability to devote time
to our business and affairs. Over the last twenty years, Mr. Zuckerman has
devoted a significant portion, although not a majority, of his business time to
the affairs of Boston Properties and its predecessors. We have no assurance that
he will continue to devote any specific portion of his time to us, although at
present, he has no commitments which would prevent him from maintaining his
current level of involvement with our business.
14
Conflicts of interest exist with holders of interests in Boston Properties
Limited Partnership.
Sales of properties and repayment of related indebtedness will have
different effects on holders of interests in Boston Properties Limited
Partnership than on our stockholders.
Some holders of interests in Boston Properties Limited Partnership,
including Messrs. Zuckerman and Linde, would incur adverse tax consequences upon
the sale of certain of our properties and on the repayment of related debt which
differ from the tax consequences to us and our stockholders. Consequently, such
holders of interests in Boston Properties Limited Partnership may have different
objectives regarding the appropriate pricing and timing of any such sale or
repayment of debt. While we have exclusive authority under the limited
partnership agreement of Boston Properties Limited Partnership to determine when
to refinance or repay debt or whether, when, and on what terms to sell a
property, subject, in the case of certain properties, to the contractual
commitments described below, any such decision would require the approval of our
board of directors. As directors and executive officers, Messrs. Zuckerman and
Linde have substantial influence with respect to any such decision. Their
influence could be exercised in a manner inconsistent with the interests of
some, or a majority, of our stockholders, including in a manner which could
prevent completion of a sale of a property or the repayment of indebtedness.
Agreement not to sell some properties.
Under the terms of the limited partnership agreement of Boston Properties
Limited Partnership, we have agreed not to sell or otherwise transfer some of
our properties, prior to specified dates, in any transaction that would trigger
taxable income, without first obtaining the consent of Messrs. Zuckerman and
Linde. However, we are not required to obtain their consent if, during the
applicable period, each of them does not hold at least 30% of his original
interests in Boston Properties Limited Partnership. In addition, we have entered
into similar agreements with respect to other properties that we have acquired
in exchange for interests in Boston Properties Limited Partnership. As of
December 31, 2001, there were a total of 36 properties subject to these
restrictions, and those 36 properties are estimated to have accounted for
approximately 59 % of our total revenue for the year ended December 31, 2001.
Boston Properties Limited Partnership has also entered into agreements
providing Messrs. Zuckerman and Linde and others with the right to guarantee
specific amounts of indebtedness and, in the event that the specific
indebtedness they guarantee is repaid or reduced, additional and/or substitute
indebtedness. These agreements may hinder actions that we may otherwise desire
to take to repay or refinance guaranteed indebtedness because we would be
required to make payments to the beneficiaries of such agreements if we violate
these agreements.
Messrs. Zuckerman and Linde will continue to engage in other activities.
Messrs. Zuckerman and Linde have a broad and varied range of investment
interests. Either one could acquire an interest in a company which is not
currently involved in real estate investment activities but which may acquire
real property in the future. However, pursuant to Mr. Linde's employment
agreement and Mr. Zuckerman's non-compete agreement, Messrs. Zuckerman and Linde
will not, in general, have management control over such companies and,
therefore, they may not be able to prevent one or more such companies from
engaging in activities that are in competition with our activities.
Changes in market conditions could adversely affect the market price of our
common stock.
As with other publicly traded equity securities, the value of our common
stock depends on various market conditions which may change from time to time.
Among the market conditions that may affect the value of our common stock are
the following:
15
o the extent of investor interest in us;
o the general reputation of real estate investment trusts and the
attractiveness of our equity securities in comparison to other equity
securities, including securities issued by other real estate-based
companies;
o our financial performance; and
o general stock and bond market conditions.
The market value of our common stock is based primarily upon the market's
perception of our growth potential and our current and potential future earnings
and cash dividends. Consequently, our common stock may trade at prices that are
higher or lower than our net asset value per share of common stock. If our
future earnings or cash dividends are less than expected, it is likely that the
market price of our common stock will diminish.
Market interest rates may have an effect on the value of our common stock.
One of the factors that investors may consider important in deciding
whether to buy or sell shares of a real estate investment trust is the dividend
with respect to such real estate investment trust's shares as a percentage of
the price of such shares, relative to market interest rates. If market interest
rates go up, prospective purchasers of shares of our common stock may expect a
higher distribution rate on our common stock. Higher market interest rates would
not, however, result in more funds for us to distribute and, to the contrary,
would likely increase our borrowing costs and potentially decrease funds
available for distribution. Thus, higher market interest rates could cause the
market price of our common stock to go down.
The number of shares available for future sale could adversely affect the market
price of our stock.
As part of our initial public offering and since then we have completed
many private placement transactions where shares of capital stock of Boston
Properties, Inc. or interests in Boston Properties Limited Partnership were
issued to owners of properties we acquired or to institutional investors. This
common stock, or common stock issuable on conversion of our preferred stock or
in exchange for such interests in Boston Properties Limited Partnership, may be
sold in the public securities markets over time pursuant to registration rights
we granted to these investors. Additional common stock reserved under our
employee benefit and other incentive plans, including stock options, may also be
sold in the market at some time in the future. Future sales of our common stock
in the market could adversely affect the price of our common stock. We cannot
predict the effect the perception in the market that such sales may occur will
have on the market price of our common stock.
We did not obtain new owner's title insurance policies in connection with
properties acquired during our initial public offering.
We acquired many of our properties from our predecessors at the completion
of our initial public offering in June 1997. Before we acquired these properties
each of them was insured by a title insurance policy. We did not, however,
obtain new owner's title insurance policies in connection with the acquisition
of these properties. Nevertheless, because in many instances we acquired these
properties indirectly by acquiring ownership of the entity which owned the
property and those owners remain in existence as our subsidiaries, some of these
title insurance policies may continue to benefit us. Many of these title
insurance policies may be for amounts less than the current values of the
applicable properties. If there was a title defect related to any of these
properties, or to any of the properties acquired at the time of our initial
public offering, that is no longer covered by a title
16
insurance policy, we could lose both our capital invested in and our anticipated
profits from such property.
We have obtained title insurance policies for all properties that we have
acquired after our initial public offering.
We face possible adverse changes in tax and environmental laws.
Generally, we pass through to our tenants costs resulting from increases in
real estate taxes. However, we generally do not pass through to our tenants
increases in income, service or transfer taxes. Similarly, changes in laws
increasing the potential liability for environmental conditions existing on our
properties or increasing the restrictions on discharges or other conditions may
result in significant unanticipated expenditures. These increased costs could
adversely affect our financial condition and results of operations and the
amount of cash available for payment of dividends.
17
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and we are required to file reports and proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy these reports, proxy statements and information at the
public reference facility maintained by the Securities and Exchange Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
You may also obtain copies at the prescribed rates from the Public Reference
Section of the Securities and Exchange Commission at its principal office in
Washington, D.C. You may call the Securities and Exchange Commission at
1-800-SEC-0330 for further information about the public reference rooms. The
Securities and Exchange Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants,
including Boston Properties, Inc., that file electronically with the Securities
and Exchange Commission. You may access the Securities and Exchange Commission's
web site at http://www.sec.gov.
18
INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference the information that we file with them. Incorporation by reference
means that we can disclose important information to you by referring you to
other documents that are legally considered to be part of this prospectus, and
later information that we file with the Securities and Exchange Commission will
automatically update and supersede the information in this prospectus, any
supplement and the documents listed below. We incorporate by reference the
specific documents listed below and any future filings made with the Securities
and Exchange Commission under Section 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act until the selling stockholders sell all of the
securities:
o our Annual Report on Form 10-K for the year ended December 31, 2001;
o our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002;
o our Proxy Statement dated March 29, 2002 prepared in connection with
our Annual Meeting of Stockholders held on May 1, 2002;
o our Current Reports on Form 8-K dated January 22, 2002, April 23,
2002, and July 23, 2002;
o the description of our common stock contained in our Registration
Statement on Form 8-A, filed on June 12, 1997 and all amendments and
reports updating the description;
o the description of the rights to purchase shares of our Series E
Junior Participating Cumulative preferred stock contained in our
registration statement on Form 8-A, filed on June 12, 1997, and the
description contained in our registration statement on Form 8-A/A
filed on June 16, 1997 amending the description, and all amendments
and reports updating that description.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or the documents incorporated by reference is accurate as of any date
other than the date on the front of this prospectus or those documents.
We will provide, without charge, at the written or oral request of anyone
to whom this prospectus is delivered, copies of the documents incorporated by
reference in this prospectus, other than an exhibit to a filing unless that
exhibit is specifically incorporated by reference into that filing. Written
requests should be directed to Boston Properties, Inc., 111 Huntington Avenue,
Suite 300, Boston, Massachusetts 02199-7610, Attention: Investor Relations.
Telephone requests may be directed to (617) 236-3300.
19
FORWARD-LOOKING STATEMENTS
Statements incorporated by reference or made under the captions "Risk
Factors" and "Our Company" and elsewhere in this prospectus are "forward-looking
statements" within the meaning of the federal securities laws. When we use the
words "anticipate," "assume," "believe," "estimate," "expect," "intend" and
other similar expressions, they generally identify forward-looking statements.
Forward-looking statements include, for example, statements relating to
acquisitions and related financial information, development activities, business
strategy and prospects, future capital expenditures, sources and availability of
capital, environmental and other regulations and competition.
You should exercise caution in interpreting and relying on forward-looking
statements since they involve known and unknown risks, uncertainties and other
factors which are, in some cases, beyond our control and could materially affect
our actual results, performance or achievements. Some of the factors that could
cause our actual results, performance or achievements to differ materially from
those expressed or implied by forward-looking statements include, but are not
limited to, the following:
o we are subject to general risks affecting the real estate industry,
including the need to enter into new leases or renew leases on
favorable terms to generate rental revenues, and dependence on our
tenants' financial condition;
o we may fail to identify, acquire, construct or develop additional
properties; we may develop properties that do not produce a desired
yield on invested capital; or we may fail to effectively integrate
acquisitions of properties or portfolios of properties;
o financing may not be available, or may not be available on favorable
terms;
o we need to make distributions to our stockholders for us to qualify
as a real estate investment trust, and if we need to borrow the
funds to make the distributions, borrowings may not be available on
favorable terms;
o we depend on the core markets where our properties are located and
these markets may be adversely affected by local economic and market
conditions which are beyond our control;
o we are subject to potential environmental liabilities;
o we are subject to complex regulations relating to our status as a
real estate investment trust and would be adversely affected if we
failed to qualify as a real estate investment trust; and
o market interest rates could adversely affect the market prices for
our common stock, as well as our performance and cash flow.
We caution you that, while forward-looking statements reflect our good
faith beliefs, they are not guarantees of future performance. In addition, we
disclaim any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
20
OUR COMPANY
Boston Properties, Inc.
We are a fully-integrated, self-administered and self-managed real estate
investment trust or "REIT" and one of the largest owners and developers of
office properties in the United States. We conduct substantially all our
business through our affiliate, Boston Properties Limited Partnership, in which
we are the sole general partner and hold a controlling economic interest.
Our properties are concentrated in four core markets--Boston, midtown
Manhattan, Washington, D.C. and San Francisco. We have full-service offices in
Boston, New York, Washington, D.C., San Francisco and Princeton, New Jersey, and
achieve efficiencies of scale by operating a centralized financial control and
data center at our Boston headquarters that is responsible for operating
budgets, billing and payments for all of our existing and development
properties.
We were formed to succeed to the real estate development, redevelopment,
acquisition, operating and leasing businesses associated with a predecessor
company founded by Messrs. Zuckerman and E. Linde in 1970. We believe that we
have created significant value for our tenants and investors by developing well
located properties that meet the demands of today's office tenants, redeveloping
underperforming assets, and continuously improving the marketing and management
of our assets.
21
DESCRIPTION OF COMMON STOCK
The following is a summary of the material terms and provisions of our
common stock. It may not contain all the information that is important to you.
You can access complete information by referring to our certificate of
incorporation, bylaws, our shareholder rights plan and the Delaware General
Corporation Law. Our shareholder rights plan is summarized below. Our
shareholder rights plan, certificate of incorporation and bylaws are
incorporated by reference into the registration statement of which this
prospectus is a part.
General
Under our certificate of incorporation, we have authority to issue
250,000,000 shares of common stock, par value $.01 per share. As of July 9,
2002, 95,259,251 shares of common stock were issued and outstanding. In
addition, as of July 9, 2002, 20,497,784 common units of Boston Properties
Limited Partnership which are exchangeable for common stock on a one-for-one
basis were outstanding. We may issue common stock from time to time. Our board
of directors must approve the amount of stock we sell and the price for which it
is sold. Holders of our common stock do not have any preferential rights or
preemptive rights to buy or subscribe for capital stock or other securities that
we may issue. However, each outstanding share of our common stock currently has
attached to it one preferred share purchase right issued under our shareholder
rights plan, which is summarized below. Our common stock does not have any
redemption or sinking fund provisions or any conversion rights.
All of our common stock, when issued, will be duly authorized, fully paid
and nonassessable. This means that the full price for our outstanding common
stock will have been paid at the time of issuance and that any holder of our
common stock will not later be required to pay us any additional money for our
common stock.
Dividends
Subject to the preferential rights of any other shares of our stock and the
provisions of our certificate of incorporation regarding excess shares, holders
of our common stock may receive dividends out of assets that we can legally use
to pay dividends when and if they are authorized and declared by our board of
directors. Each common stockholder shares in the same proportion as other common
stockholders out of assets that we can legally use to pay distributions after we
pay or make adequate provision for all of our known debts and liabilities in the
event we are liquidated, dissolved or our affairs are wound up.
Voting rights
Subject to the provisions of our certificate of incorporation regarding
excess shares, holders of common stock will have the exclusive power to vote on
all matters presented to our stockholders, including the election of directors,
except as otherwise provided by Delaware law or as provided with respect to any
other shares of our stock. Holders of our common stock are entitled to one vote
per share. There is no cumulative voting in the election of our directors, which
means that at any meeting of our stockholders, the holders of a majority of the
outstanding common stock can elect all of the directors then standing for
election.
Other rights
Subject to the provisions of our certificate of incorporation regarding
excess shares, all shares of our common stock have equal dividend, distribution,
liquidation and other rights, and have no preference, appraisal or exchange
rights, except for any appraisal rights provided by Delaware law.
22
Delaware law generally requires that we obtain the approval of a majority
of the outstanding shares of our common stock that are entitled to vote before
we may consolidate our stock or merge with another corporation. However,
Delaware law does not require that we seek approval of our stockholders to enter
into a merger in which we are the surviving corporation following the merger if:
o our certificate of incorporation is not amended in any respect by
the merger;
o each share of our stock outstanding prior to the merger is to be an
identical share of stock following the merger; and
o any shares of common stock (together with any other securities
convertible into shares of common stock) to be issued or delivered
as a result of the merger represent no more than 20% of the number
of shares of our common stock outstanding immediately prior to the
merger.
Restrictions on ownership
For us to qualify as a real estate investment trust under the Internal
Revenue Code, no more than 50% in value of our outstanding stock may be owned,
actually or constructively, by five or fewer individuals during the last half of
a taxable year. To assist us in meeting this requirement, we may take actions
including the automatic conversion of shares in excess of this ownership
restriction into excess shares to limit the ownership of our outstanding equity
securities, actually or constructively, by one person or entity. See "Limits on
Ownership of Our Stock" beginning on page 26.
Transfer agent
The transfer agent and registrar for our common stock is Equiserve Trust
Company, N.A.
Preferred shares
Under our certificate of incorporation, we have authority to issue up to
50,000,000 shares of preferred stock. We do not have any preferred stock
outstanding as of the date of this prospectus. We may issue preferred stock from
time to time, in one or more series, as authorized by our board of directors.
Prior to issuance of shares of each series, our board of directors is required
by the Delaware General Corporation Law and our certificate of incorporation to
fix for each series, subject to the provisions of our certificate of
incorporation regarding excess shares, the terms, preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption, as are
permitted by Delaware law. The preferred stock will, when issued, be fully paid
and nonassessable and will have no preemptive rights. Our board of directors
could authorize the issuance of preferred stock with terms and conditions that
could have the effect of discouraging a takeover or other transaction that
holders of our common stock might believe to be in their best interests or in
which holders of some, or a majority, of our common stock might receive a
premium for their shares over the then market price of our common stock.
Under our certificate of incorporation, we have authority to issue up to
150,000,000 shares of Series E junior participating cumulative preferred stock.
At July 9, 2002, none of the Series E junior participating cumulative preferred
stock were issued or outstanding. Shares of our Series E junior participating
cumulative preferred stock may be issued under our shareholder rights plan,
which is summarized beginning on page 24.
23
Shareholder rights plan
In 1997, our board of directors adopted a shareholder rights plan and
entered into a shareholder rights agreement with Fleet National Bank (f.k.a.
BankBoston, N.A.), as rights agent. The purpose of our shareholder rights plan
is to enhance our board of directors' ability to protect our stockholders'
interests by ensuring that stockholders receive fair treatment in the event that
any coercive takeover attempt of Boston Properties is made in the future. The
rights plan is intended to provide our board of directors with sufficient time
to consider any and all alternatives to a takeover action. The rights may
discourage, delay or prevent hostile takeovers. They are not intended, however,
to interfere with any merger or other business combination approved by our board
of directors.
Under our shareholder rights plan, one preferred stock purchase right is
attached to each outstanding share of our common stock. We refer to these
preferred stock purchase rights as the "rights." Each share of common stock
issued in the future will also receive a right until any of the rights become
exercisable. Until a right is exercised, the holder of a right does not have any
additional rights as a stockholder. These rights will expire on June 11, 2007,
unless previously redeemed or exchanged by us as described below. These rights
trade automatically with our common stock and will separate from the common
stock and become exercisable only under the circumstances described below.
In general, the rights will become exercisable when the first of the
following events happens:
1. ten calendar days after a public announcement that a person or
group has acquired beneficial ownership of 15% or more of the sum
of our outstanding common stock and excess stock; or
2. ten business days, or such other date determined by our board of
directors, after the beginning of a tender offer or exchange offer
that would result in a person or group beneficially owning 15% or
more of the sum of our outstanding common stock and excess stock.
Under our shareholder rights plan, our common stock that may be issued in
exchange for outstanding common units of limited partnership interest in Boston
Properties Limited Partnership is not included in the definition of beneficial
ownership.
However, if a person who became a limited partner of Boston Properties
Limited Partnership at the time of our initial public offering acquires
beneficial ownership of 15% or more of the sum of our common stock and excess
stock, the rights will not become exercisable unless the acquisition results in
that person acquiring a greater percentage of the outstanding shares of our
outstanding common stock plus outstanding common units of limited partnership
interest of Boston Properties Limited Partnership than the percentage of
outstanding shares of common stock plus outstanding common units of limited
partnership interest of Boston Properties Limited Partnership that person held
at the completion of our initial public offering. In addition, no group of which
a person who became a partner of Boston Properties Limited Partnership at the
time of our initial public offering is a member will be deemed to beneficially
own our common stock and excess stock owned by that person. Common units of
limited partnership interest of Boston Properties Limited Partnership held by
Boston Properties, Inc. are excluded in making these calculations.
If the rights become exercisable, holders of the rights will be able to
purchase from us a unit of preferred stock equal to one ten-thousandth of a
share of our Series E junior participating cumulative preferred stock at a price
of $100 per unit, subject to adjustment. We have designated 200,000 shares of
Series E junior participating cumulative preferred stock and have reserved these
24
shares for issuance under our shareholder rights plan. However, all rights owned
by any persons or groups triggering the event shall be void.
In addition, if at any time following a public announcement that a person
or group has acquired beneficial ownership of 15% or more of the sum of our
outstanding common stock and excess stock:
o we enter into a merger or other business combination transaction in
which we are not the surviving entity;
o we enter into a merger or other business combination transaction in
which all or part of our common stock is exchanged; or
o we sell, transfer or mortgage 50% or more of our assets or earning
power;
then each holder of a right, other than rights held by the person or group who
triggered the event, will be entitled to receive, upon exercise, common stock of
the acquiring company equal to two times the purchase price of the right.
At any time after our public announcement that a person or group has
acquired beneficial ownership of 15% or more of the sum of our outstanding
common stock and excess stock, our board of directors may, at its option,
exchange all or any part of the then outstanding and exercisable rights for
shares of our common stock or units of Series E junior participating cumulative
preferred stock at an exchange ratio of one share or one unit per right.
However, our board of directors generally will not be empowered to effect an
exchange at any time after any person becomes the beneficial owner of 50% or
more of our outstanding common stock.
We may redeem the rights at $.001 per right at any time before the date
that is ten days after a public announcement that a person or group has acquired
beneficial ownership of 15% or more of the sum of our outstanding common stock
and excess stock. We may extend this redemption period at any time while the
rights are still redeemable. The rights will expire at the close of business on
June 11, 2007 unless we redeem them before that date.
The above description of our shareholder rights plan is not intended to be
a complete description. For a full description of the shareholder rights plan,
you should read the rights agreement. You may obtain a copy of the rights
agreement at no charge by writing to us at the address listed on page 19.
25
LIMITS ON OWNERSHIP OF OUR STOCK
Ownership limits
For us to qualify as a real estate investment trust under the Internal
Revenue Code, among other things, not more than 50% in value of our outstanding
stock may be owned, actually or constructively, by five or fewer individuals
during the last half of a taxable year other than the first year, and our
outstanding stock must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of 12 months other than the first year or
during a proportionate part of a shorter taxable year. In order to protect us
against the risk of losing our status as a real estate investment trust due to a
concentration of ownership among our stockholders, our certificate of
incorporation provides that generally no holder may beneficially own, or be
deemed to own by virtue of the attribution provisions of the Internal Revenue
Code, more than 6.6% of any class or series of our stock. Under our certificate
of incorporation, a person generally "beneficially owns" shares if:
o the person has direct ownership of the shares,
o the person has indirect ownership of the shares taking into account
the constructive ownership rules of Section 544 of the Internal
Revenue Code, as modified by Section 856(h)(1)(B) of the Internal
Revenue Code, or
o the person would be deemed to beneficially own the shares pursuant
to Rule 13d-3 under the Exchange Act of 1934, as amended.
Our certificate of incorporation allows two exceptions to the 6.6%
ownership limit:
15% Related party ownership limit:
Each of Messrs. Zuckerman and E. Linde, together with their respective
heirs, legatees, devisees and any other person whose beneficial
ownership of our common stock would be attributed under the Internal
Revenue Code to them, are subject to an ownership limit of 15% for each
of them together with such persons related to them.
15% Look-through entity ownership limit:
Pension plans described in Section 401(a) of the Internal Revenue Code
and mutual funds registered under the Investment Company Act of 1940
are subject to an ownership limit of 15%. Pension plans and mutual
funds are among the entities that are not treated as stockholders under
the "five or fewer requirement." Rather, the beneficial owners of these
entities will be counted as stockholders for this purpose.
The foregoing restrictions will not apply if our board of directors
determines that it is no longer in our best interests to attempt to qualify, or
to continue to qualify, as a real estate investment trust. In addition, the
foregoing restrictions do not apply with respect to an offeror in the event of
an all cash tender offer by it which has been accepted by at least two-thirds of
our outstanding stock.
Shares in excess of ownership limits
Transfers of our stock or any security convertible into our stock or other
events that would create a direct or indirect ownership of our stock that would:
o violate the 6.6% ownership limit;
o violate the 15% ownership limit for related parties;
26
o violate the 15% ownership limit for look-through entities; or
o result in our disqualification as a real estate investment
trust, including any transfer that results in:
o our stock being owned by fewer than 100 persons,
o Boston Properties being "closely held" with the meaning of
Section 856(h) of the Internal Revenue Code, or
o Boston Properties constructively owning 10% or more of one of
our tenants,
shall be null and void and of no effect with respect to the shares in excess of
the applicable limit. Any shares in excess of an applicable limitation will be
converted automatically into an equal number of shares of our excess stock that
will be transferred by operation of law to a trust for the benefit of a
qualified charitable organization selected by us, but not affiliated with us. As
soon as practicable after the transfer of shares to the trust, the trustee of
the trust will be required to sell the excess shares to a person or entity who
could own the shares without violating the applicable limit and distribute to
the original transferee-stockholder an amount equal to the lesser of:
o the proceeds of the sale, or
o the price paid for our stock in excess of the applicable limit by
the original transferee-owner or, in the event that the original
violative transfer was a gift or an event other than a transfer, the
fair market value of the excess shares on the date they are sold by
the trust.
All dividends and other distributions received with respect to the excess
shares prior to their sale by the trust and any proceeds from the sale by the
trust in excess of the amount distributable to the original transferee-owner
will be distributed to the beneficiary of the trust.
Right to purchase excess shares
In addition to the foregoing transfer restrictions, we have the right, for
a period of 90 days during the time any excess shares are held by the trust, to
purchase all or any portion of the excess shares for the lesser of the price
paid for the shares in excess of the applicable limit by the original
transferee-stockholder or the market price of our stock on the date we exercise
our option to purchase, which amount will be paid to the original
transferee-stockholder. The market price will be determined in the manner set
forth in our certificate of incorporation. The 90-day period begins on the date
of the violative transfer if the original transferee-stockholder gives notice to
us of the transfer or, if no notice is given, the date on which our board of
directors determines that a violative transfer has been made.
Disclosure of stock ownership by our stockholders
Each of our stockholders will upon demand be required to disclose to us in
writing any information with respect to the direct, indirect and constructive
ownership of shares of our stock as our board of directors deems necessary to
comply with the provisions of the Internal Revenue Code applicable to real
estate investment trusts, to comply with the requirements of any taxing
authority or governmental agency or to determine any such compliance.
These ownership limitations may have the effect of precluding the
acquisition of control of Boston Properties unless our board of directors
determines that our maintenance of real estate investment trust status is no
longer in our best interests.
27
IMPORTANT PROVISIONS OF DELAWARE LAW AND
OUR CERTIFICATE OF INCORPORATION AND BYLAWS
The following is a summary of important provisions of Delaware law and our
certificate of incorporation and bylaws which affect us and our stockholders.
The description below is intended as only a summary. You can access complete
information by referring to Delaware General Corporation Law and our certificate
of incorporation and bylaws.
Business combinations with interested stockholders under Delaware law
Section 203 of the Delaware General Corporation Law prevents a publicly
held corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless:
o before the date on which the person became an interested
stockholder, the board of directors of the corporation approved
either the business combination or the transaction in which the
person became an interested stockholder;
o the interested stockholder owned at least 85% of the outstanding
voting stock of the corporation at the beginning of the transaction
in which it became an interested stockholder, excluding stock held
by directors who are also officers of the corporation and by
employee stock plans that do not provide participants with the
rights to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer; or
o after the date on which the interested stockholder became an
interested stockholder, the business combination is approved by the
board of directors and the holders of two-thirds of the outstanding
voting stock of the corporation voting at a meeting, excluding the
voting stock owned by the interested stockholder.
As defined in Section 203, an "interested stockholder" is generally a
person owning 15% or more of the outstanding voting stock of the corporation. As
defined in Section 203, a "business combination" includes mergers,
consolidations, stock and assets sales and other transactions with the
interested stockholder.
The provisions of Section 203 may have the effect of delaying, deferring or
preventing a change of control of Boston Properties.
Amendment of our certificate of incorporation and bylaws
Amendments to our certificate of incorporation must be approved by our
board of directors and generally by the vote of a majority of the votes entitled
to be cast at a meeting of our stockholders. However, a 75% stockholder vote is
required for amendments dealing with fundamental governance provisions of our
certificate of incorporation, including:
o stockholder action;
o the powers, election of, removal of and classification of directors;
o limitation of liability; or
o amendment of our certificate of incorporation.
28
Unless otherwise required by law, our board of directors may amend our
bylaws by a majority vote of our directors then in office. Our bylaws may also
be amended by a majority stockholder vote if our board of directors recommends
the approval of the amendment, and otherwise by a 75% stockholder vote.
Meetings of stockholders
Under our bylaws, we will hold annual meetings of our stockholders at a
date and time as determined by our board of directors, Chairman or President.
Our bylaws require advance notice for our stockholders to make nominations of
candidates for our board of directors or bring other business before an annual
meeting of our stockholders. Only our board of directors can call special
meetings of our stockholders and any special meeting is restricted to
considering and acting upon matters set forth in the notice of that special
meeting.
Board of directors
Our board of directors is divided into three classes. As the term of each
class expires, directors in that class will be elected for a term of three years
and until their successors are duly elected and qualified.
Our certificate of incorporation provides that a 75% vote of our board of
directors is required to approve fundamental changes or actions, including:
o a change of control of Boston Properties or of Boston Properties
Limited Partnership;
o any amendment to the limited partnership agreement of Boston
Properties Limited Partnership;
o any waiver of the limitations on ownership contained in our
certificate of incorporation;
o certain issuances of equity securities by Boston Properties; and
o termination of our status as a REIT.
Shareholder rights plan and ownership limitations
We have adopted a shareholder rights agreement. In addition, our
certificate of incorporation contains provisions that limit the ownership by any
person of shares of any class or series of our capital stock. See "Shareholder
rights plan" beginning on page 24 and "Limits on Ownership of Our Stock"
beginning on page 26.
Limitation of directors' and officers' liability
Our certificate of incorporation generally limits the liability of our
directors to Boston Properties to the fullest extent permitted by Delaware law,
as it now exists or may in the future be amended. The Delaware General
Corporation Law permits a corporation to indemnify its directors, officers,
employees or agents and expressly provides that the indemnification provided for
under the Delaware General Corporation Law shall not be deemed exclusive of any
indemnification right under any bylaw, vote of stockholders or disinterested
directors, or otherwise. Delaware law permits indemnification against expenses
and certain other liabilities arising out of legal actions brought or threatened
against these persons for their conduct on behalf of a corporation, provided
that each such person acted in good faith and in a manner that he or she
reasonably believed was in or not opposed to the corporation's best interests
and, in the case of a criminal proceeding, provided each person had no
reasonable cause to believe his or her conduct was unlawful. Delaware law does
not allow indemnification of directors in the case of an action by or in the
right of a corporation unless the directors successfully defend the action or
indemnification is ordered by the court.
29
Our bylaws provide that our directors and officers will be, and, in the
discretion of our board of directors, non-officer employees may be, indemnified
by Boston Properties to the fullest extent authorized by Delaware law, as it now
exists or may in the future be amended, against all expenses and liabilities
actually and reasonably incurred in connection with service for or on behalf of
Boston Properties. Our bylaws also provide that the right of directors and
officers to indemnification shall be a contract right and shall not be exclusive
of any other right now possessed or hereafter acquired under any bylaw,
agreement, vote of stockholders, or otherwise.
Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. This provision does not alter a
director's liability under the federal securities laws. In addition, this
provision does not affect the availability of equitable remedies, including an
injunction or rescission, for breach of fiduciary duty.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling Boston
Properties pursuant to the foregoing provisions, we have been informed that in
the opinion of the staff of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
Indemnification agreements
We have entered into indemnification agreements with each of our directors
and executive officers. The indemnification agreements require, among other
things, that we indemnify our directors and executive officers to the fullest
extent permitted by law and advance to our directors and executive officers all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Under these agreements, we must also indemnify
and advance all expenses incurred by our directors and executive officers
seeking to enforce their rights under the indemnification agreements and cover
our directors and executive officers under our directors' and officers'
liability insurance. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by our certificate of
incorporation and our bylaws, it provides greater assurance to our directors and
executive officers that indemnification will be available, because, as a
contract, it cannot be modified unilaterally in the future by our board of
directors or by our stockholders to eliminate the rights it provides.
30
FEDERAL INCOME TAX CONSIDERATIONS AND CONSEQUENCES OF YOUR INVESTMENT
The following is a general summary of the material federal income tax
considerations and consequences associated with an investment in our common
stock. The following discussion is not exhaustive of all possible tax
considerations and is not tax advice. Moreover, this summary does not deal with
all tax aspects or consequences that might be relevant to you in light of your
personal circumstances; nor does it deal with particular types of stockholders
that are subject to special treatment under the Internal Revenue Code, including
insurance companies, financial institutions and broker-dealers. The Internal
Revenue Code provisions governing the federal income tax treatment of real
estate investment trusts are highly technical and complex, and this summary is
qualified in its entirety by the applicable Internal Revenue Code provisions,
rules and regulations promulgated thereunder, and administrative and judicial
interpretations thereof. The following discussion is based on current law and on
representations from us concerning our compliance with the requirements for
qualification as a real estate investment trust.
We urge you, as a prospective investor, to consult your own tax advisor
with respect to the specific federal, state, local, foreign and other tax
consequences to you of the purchase, holding and sale of our common stock.
Federal income taxation
In the opinion of our tax counsel, Goodwin Procter LLP, commencing with our
first taxable year ended December 31, 1997, we have been organized in conformity
with the requirements for qualification as a real estate investment trust under
the Internal Revenue Code, and our method of operation will enable us to
continue to meet the requirements for qualification and taxation as a real
estate investment trust under the Internal Revenue Code, provided that we have
operated and continue to operate in accordance with various assumptions and
factual representations made by us concerning our business, properties and
operations. We may not, however, have met or continue to meet these
requirements. Qualification as a real estate investment trust depends upon us
having met and continuing to meet the various requirements imposed under the
Internal Revenue Code through actual operating results. Goodwin Procter LLP has
relied on our representations regarding our operations and has not and will not
review these operating results. No assurance can be given that actual operating
results have met or will meet these requirements.
If we have qualified and continue to qualify for taxation as a real estate
investment trust, we generally will not be subject to federal corporate income
taxes on that portion of our ordinary income or capital gain that is currently
distributed to stockholders. The real estate investment trust provisions of the
Internal Revenue Code generally allow a real estate investment trust to deduct
dividends paid to its stockholders. This deduction for dividends paid to
stockholders substantially eliminates the federal double taxation on earnings
that usually results from investments in a corporation. "Double taxation" refers
to taxation of income once at the corporate level when earned and once again at
the stockholder level when distributed. Additionally, a real estate investment
trust may elect to retain and pay taxes on a designated amount of its net
long-term capital gains, in which case the stockholders of the real estate
investment trust will include their proportionate share of the undistributed
long-term capital gains in income and receive a credit or refund for their share
of the tax paid by the real estate investment trust.
Failure to qualify
If we fail to qualify for taxation as a real estate investment trust in any
taxable year and the relief provisions do not apply, we will be subject to tax
on our taxable income at regular corporate rates, including any applicable
alternative minimum tax. Distributions to stockholders in any year in which we
fail to qualify will not be deductible by us nor will they be required to be
made. In such event, to the extent of current or accumulated earnings and
profits, all distributions to stockholders
31
will be dividends, taxable as ordinary income, and subject to limitations of the
Internal Revenue Code, corporate distributees may be eligible for the
dividends-received deduction. Unless we are entitled to relief under specific
statutory provisions, we also will be disqualified from taxation as a real
estate investment trust for the four taxable years following the year during
which qualification was lost. It is not possible to state whether in all
circumstances we would be entitled to statutory relief. For example, we must
derive a minimum percent of our gross income from specified sources in order to
qualify as a real estate investment trust. If we fail to satisfy these gross
income tests because nonqualifying income that we intentionally incur exceeds
the limit on gross income, the Internal Revenue Service could conclude that our
failure to satisfy the tests was not due to reasonable cause, which is a
condition to qualification for relief from the four-year disqualification rule.
Taxation of United States stockholders and potential tax consequences of their
investment in our common stock
When we refer to a United States stockholder, we mean a holder of common
stock that is for federal income tax purposes:
o an individual who is a citizen or resident of the United States;
o a corporation created or organized in or under the laws of the
United States, any state thereof or the District of Columbia; or
o a partnership, trust or estate treated as a domestic partnership,
trust or estate.
For any taxable year for which we qualify for taxation as a real estate
investment trust, amounts distributed to taxable United States stockholders will
be taxed as follows.
Distributions generally. Distributions other than capital gain dividends to
United States stockholders will be taxable as dividends to the extent of our
current or accumulated earnings and profits as determined for federal income tax
purposes. For purposes of determining whether distributions are out of current
or accumulated earnings and profits, our earnings and profits will be allocated
first to any of our outstanding preferred shares and then to our common stock.
Dividends will be taxable to the stockholders as ordinary income and will not be
eligible for the dividends-received deduction for corporations. To the extent
that we make a distribution to a United States stockholder in excess of current
or accumulated earnings and profits, the distribution will be treated first as a
tax-free return of capital with respect to the shares, reducing the United
States stockholder's tax basis in the shares, and the distribution in excess of
a United States stockholder's tax basis in the shares will be taxable as gain
realized from the sale of the shares. Dividends declared by us in October,
November or December of any year payable to a stockholder of record on a
specified date in any such month shall be treated as both paid by us and
received by the stockholder on December 31 of the year, provided that the
dividend is actually paid by us during January of the following calendar year.
United States stockholders may not include on their own federal income tax
returns any of our tax losses.
Capital gain dividends. Dividends to United States stockholders that are
properly designated by us as capital gain dividends will be treated as long-term
capital gains, to the extent they do not exceed our actual net capital gains,
for the taxable year without regard to the period for which the stockholder has
held its common stock. However, corporate stockholders may be required to treat
up to 20% of particular capital gain dividends as ordinary income. Capital gain
dividends are not eligible for the dividends-received deduction for
corporations.
Retained capital gains. A real estate investment trust may elect to retain,
rather than distribute, its net long-term capital gains received during the
year. To the extent designated by the
32
real estate investment trust in a notice to its stockholders, the real estate
investment trust will pay the income tax on these gains and the real estate
investment trust stockholders must include their proportionate share of the
undistributed long-term capital gains so designated in income. Each real estate
investment trust stockholder will be deemed to have paid its share of the tax
paid by the real estate investment trust, which will be credited or refunded to
the stockholder. The basis of each stockholder's real estate investment trust
shares will be increased by its proportionate amount of the undistributed
long-term capital gains, net of the tax paid by the real estate investment
trust, included in each stockholder's long-term capital gains.
Passive activity loss and investment interest limitations. Distributions,
including deemed distributions of undistributed long-term capital gains, from us
and gain from the disposition of common stock will not be treated as passive
activity income, and therefore stockholders may not be able to apply any passive
losses against this income. Dividends from us, to the extent they do not
constitute a return of capital, will generally be treated as investment income
for purposes of the investment income limitation on the deductibility of
investment interest. However, net capital gain from the disposition of common
stock or capital gain dividends, including deemed distributions of undistributed
long-term capital gains, generally will be excluded from investment income.
Sale of the common stock. Upon the sale or exchange of common stock, the
United States stockholder will generally recognize gain or loss equal to the
difference between the amount realized on the sale and the tax basis of the
common stock sold or exchanged. Assuming the shares are held as a capital asset,
the gain or loss will be a long-term capital gain or loss if the shares have
been held for more than one year. However, any loss recognized by a United
States stockholder on the sale of common stock held for not more than six months
and with respect to which capital gains were required to be included in the
stockholder's income will be treated as a long-term capital loss to the extent
of the amount of the capital gains so included.
In general, the maximum tax rate imposed on the long-term capital gains of
non-corporate taxpayers is 20%, although a 25% maximum tax rate is imposed on
the portion of the gains attributable to the prior depreciation claimed in
respect of depreciable real property held for more than one year to the extent
the gain is not otherwise characterized as ordinary income under the "recapture"
provisions of Section 1250 of the code. The Secretary of the Treasury has the
authority to prescribe regulations on how the capital gains rates will apply to
sales and exchanges by partnerships and REITs and of interests in partnerships
and REITs. Pursuant to this authority, the Secretary of the Treasury issued
regulations relating to the taxation of capital gains in the case of sales and
exchanges of interests in partnerships. As of this time, the Secretary of the
Treasury has not issued regulations relating to the taxation of capital gains in
the case of sales or exchanges of interests in REITs. Accordingly, you are urged
to consult with your tax advisors with respect to your capital gain tax
liability resulting from any sale or taxable exchange by you of our common
stock.
Treatment of tax-exempt stockholders. Distributions, including deemed
distributions of undistributed long-term capital gains, from us to a tax-exempt
employee pension trust or other domestic tax-exempt stockholder generally will
not constitute unrelated business taxable income unless the stockholder has
borrowed to acquire or carry its common stock. However, certain qualified trusts
that hold more than 10% by value of the shares of a particular real estate
investment trust may be required to treat a specified percentage of these
distributions, including deemed distributions of undistributed long-term capital
gains, as unrelated business taxable income.
Backup withholding
Under the backup withholding rules, a United States stockholder may be
subject to backup withholding at the rate of 30% (decreasing periodically to 28%
in 2006) with respect to dividends paid on, and gross proceeds from the sale of,
the common stock unless the stockholder (1) is a
33
corporation or comes within other specific exempt categories and, when required,
demonstrates this fact or (2) provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. A United
States stockholder who does not provide us with its current taxpayer
identification number may be subject to penalties imposed by the Commissioner of
the Internal Revenue Service. Any amount paid as backup withholding will be
creditable against the stockholder's income tax liability.
We will report to stockholders and the Internal Revenue Service the amount
of any reportable payments, including any dividends paid, and any amount
withheld with respect to the common stock during the calendar year.
State and local tax
Boston Properties and our stockholders may be subject to state and local
tax in various states and localities, including those in which we or our
stockholders transact business, own property or reside. The tax treatment of us
and our stockholders in these jurisdictions may differ from the federal income
tax treatment described above. Consequently, as a prospective investor, you
should consult your own tax advisors regarding the effect of state and local tax
laws on an investment in our common stock.
34
REGISTRATION RIGHTS OF THE SELLING STOCKHOLDERS
The following is a summary of the material terms and provisions of the
registration rights agreements which we entered into with the selling
stockholders. It may not contain all the information that is important to you.
You can access complete information by referring to the agreements.
Under the registration rights agreements, we are obligated to file a
registration statement covering the sale by the selling stockholders of the
common stock issued in connection with the agreements and we must use reasonable
efforts to cause the registration statement to be declared effective by the
Securities and Exchange Commission and to keep the registration statement
continuously effective until the earlier of:
o the date on which the selling stockholders no longer hold any common
stock to which the registration rights agreements apply; or
o the date on which all of the common stock to which the registration
rights agreements apply held or acquired in the future by the
selling stockholders has become eligible for sale under Rule 144(k)
of the Securities Act of 1933.
Any common stock sold by the selling stockholders pursuant to this prospectus
will no longer be entitled to the benefits of the registration rights
agreements.
The registration rights agreements require that we bear all expenses of
registering the common stock with the exception of brokerage and underwriting
commissions and taxes of any kind and any legal, accounting and other expenses
incurred by the selling stockholders, subject to our right to receive payments
from one of the selling stockholders pursuant to a letter agreement. We also
agreed to indemnify the selling stockholders and affiliated persons against all
losses, claims, damages, actions, liabilities, costs and expenses arising under
the securities laws in connection with the registration statement or this
prospectus, subject to limitations specified in the registration rights
agreements. In addition, the selling stockholders agreed to indemnify us and our
directors, officers and any person who controls our company against all losses,
claims, damages, actions, liabilities, costs and expenses arising under the
securities laws if they result from:
o written information furnished to us by the selling stockholders for
use in the registration statement or this prospectus or any
amendments to the registration statement or any prospectus
supplements; or
o the selling stockholders' failure to deliver, or cause to be
delivered, this prospectus or any amendments or prospectus
supplements to any purchaser of common stock covered by this
prospectus from the selling stockholders through no fault of ours.
35
THE SELLING STOCKHOLDERS
The following table sets forth the number of shares of common stock
beneficially owned by the selling stockholders as of July 9, 2002, the number of
shares of common stock covered by this prospectus and the total number of shares
of common stock which the selling stockholders will beneficially own upon
completion of this offering. Except as noted, this table assumes that the
selling stockholders offer for sale all of the shares of common stock covered by
this prospectus.
The common stock offered by this prospectus may be offered from time to
time by the selling stockholders named below, or by any of their pledgees,
donees, transferees or other successors in interest. The amounts set forth below
are based upon information provided to us by representatives of the selling
stockholders, or on our records, as of July 9, 2002 and are accurate to the best
of our knowledge. It is possible, however, that the selling stockholders may
acquire or dispose of additional shares of common stock or units from time to
time after the date of this prospectus.
Common Stock Common Stock
Beneficially Common Stock to be Percentage
Owned as of Offered Owned After of All
Name July 9, 2002 Hereby (1) Offering (2) Common Stock (7)
---- ------------ ---------- ------------------ ----------------
Vincent deP. Farrell, Jr. 11,203 11,203 0 *
Bruce W. Jones 35 35 0 *
George M. Topliff 3,195 3,195 0 *
Trust u/w Winthrop
Rockefeller 832,121 832,121 0 *
Perseverance Associates, 218,795 218,795 0 *
L.P.
PIC Realty Corporation 219,088 (3) 219,088 (3) 0 *
The Prudential Insurance 6,031,160 (4) 219,675 (5) 5,811,485 (6) 6.1%
Company of America
TOTAL 6,877,714 1,066,229 5,811,485
--------- --------- ---------
----------------------------
* Less than 1%.
(1) These shares of common stock represent the common stock covered by our
registration rights agreements with the selling stockholders.
(2) Assumes that all shares of common stock offered by this prospectus will be
sold by the selling stockholders.
(3) Includes 293 shares held by PIC Realty Corporation and 218,795 shares held
by Perseverance Associates, L.P.
(4) Includes 219,675 shares of our common stock offered by this prospectus of
which 587 shares are held by The Prudential Insurance Company of America
("Prudential"), 293 shares are held by PIC Realty Corporation and 218,795
shares are held by Perseverance Associates, L.P. Also includes (1) 50,000
shares of our common stock that Prudential may acquire if it presents its
50,000 common units of Boston Properties Limited Partnership to us for
redemption and we exercise our right to issue common stock to it instead of
cash; (2) 3,134,914 shares of our common stock held by accounts managed by
Prudential or its affiliates on behalf of: (i) QM accounts including
2,671,314 shares of our common stock; (ii) Jennison Series Funds including
253,900 shares of our common stock; (iii) Jennison Mutual Funds including
197,200 shares of our common stock; (iv) Jennison External Accounts
including 3,800 shares of our common stock; and (v) Jennison PruTrust Funds
including 8,700 shares of our common stock; and (3) 1,900 shares of our
common stock held in discretionary accounts on behalf of clients of
Prudential Securities Incorporated ("PSI"), an affiliate of Prudential.
Prudential disclaims beneficial ownership of the shares of our
36
common stock held by accounts managed by Prudential or its affiliates
because the voting and disposition of these shares is controlled for the
benefit of the clients in the QM accounts, Jennison accounts and PSI
discretionary accounts.
(5) Includes 587 shares held by Prudential, 293 shares held by PIC Realty
Corporation and 218,795 shares are held by Perseverance Associates, L.P.
(6) Includes (1) 50,000 shares of our common stock that Prudential may acquire
if it presents its 50,000 common units of Boston Properties Limited
Partnership to us for redemption and we exercise our right to issue common
stock to it instead of cash; (2) 3,134,914 shares of our common stock held
by accounts managed by Prudential or its affiliates on behalf of: (i) QM
accounts including 2,671,314 shares of our common stock; (ii) Jennison
Series Funds including 253,900 shares of our common stock; (iii) Jennison
Mutual Funds including 197,200 shares of our common stock; (iv) Jennison
External Accounts including 3,800 shares of our common stock; and (v)
Jennison PruTrust Funds including 8,700 shares of our common stock; and (3)
1,900 shares of our common stock held in discretionary accounts on behalf
of clients of PSI. Prudential disclaims beneficial ownership of the shares
of our common stock held by accounts managed by Prudential or its
affiliates because the voting and disposition of these shares is controlled
for the benefit of the clients in the QM accounts, Jennison accounts and
PSI discretionary accounts.
(7) Assumes that all the common units and Series One preferred units (on an as
converted basis) held by the person are presented to Boston Properties for
redemption and acquired by Boston Properties for shares of common stock.
The total number of shares of common stock outstanding used in calculating
the percentage assumes that none of the common units and Series One
preferred units (on an as converted basis) held by other persons are
presented to Boston Properties for redemption and acquired by Boston
Properties for shares of common stock.
37
USE OF PROCEEDS
We will not receive any of the proceeds of the sale by the selling
stockholders of the common stock covered by this prospectus.
PLAN OF DISTRIBUTION
This prospectus relates to the possible sale from time to time of up to an
aggregate of 1,066,229 shares of common stock by the selling stockholders, or
any of their pledgees, donees, transferees or other successors in interest. We
are registering the common stock pursuant to our obligations under the
registration rights agreements, but the registration of the common stock does
not necessarily mean that any of the common stock will be offered or sold by the
selling stockholders.
The distribution of the common stock may be effected from time to time in
one or more underwritten transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to prevailing market prices or at negotiated prices. Any underwritten offering
may be on a "best efforts" or a "firm commitment" basis. In connection with any
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders.
Underwriters may sell the common stock to or through dealers, and these dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents.
The selling stockholders and any underwriters, dealers or agents that
participate in the distribution of the common stock may be deemed to be
underwriters under the Securities Act of 1933, and any profit on the sale of the
common stock by them and any discounts, commissions or concessions received by
any underwriters, dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. At any time a particular offer
of common stock is made by the selling stockholders, a prospectus supplement, if
required, will be distributed that will, where applicable:
o identify any underwriter, dealer or agent;
o describe any compensation in the form of discounts, concessions,
commissions or otherwise received by each underwriter, dealer or
agent and in the aggregate to all underwriters, dealers and agents;
o identify the amounts underwritten;
o identify the nature of the underwriter's obligation to take the
common stock; and
o provide any other required information.
The sale of common stock by the selling stockholders may also be effected
by selling common stock directly to purchasers or to or through broker-dealers.
In connection with any such sale, any broker-dealer may act as agent for the
selling stockholders or may purchase from the selling stockholders all or a
portion of the common stock as principal, and may be made pursuant to any of the
methods described below. Sales may be made on the New York Stock Exchange or
other exchanges on which the common stock are then traded, in the
over-the-counter market, in negotiated transactions or otherwise at prices and
at terms then prevailing or at prices related to the then-current market prices
or at prices otherwise negotiated.
38
Common stock may also be sold in one or more of the following transactions:
o block transactions in which a broker-dealer may sell all or a
portion of the shares as agent but may position and resell all or a
portion of the block as principal to facilitate the transaction;
o purchases by any broker-dealer as principal and resale by any
broker-dealer for its own account pursuant to any supplement to this
prospectus;
o a special offering, an exchange distribution or a secondary
distribution in accordance with applicable New York Stock Exchange
or other stock exchange rules;
o ordinary brokerage transactions and transactions in which any
broker-dealer solicits purchasers;
o sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for shares;
and
o sales in other ways not involving market makers or established
trading markets, including direct sales to purchasers.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or other compensation from the selling stockholders in amounts to be
negotiated immediately prior to the sale that will not exceed those customary in
the types of transactions involved. Broker-dealers may also receive compensation
from purchasers of the common stock which is not expected to exceed that which
is customary in the types of transactions involved.
To comply with applicable state securities laws, the common stock will be
sold, if necessary, in these jurisdictions only through registered or licensed
brokers or dealers. In addition, common stock may not be sold in some states
unless they have been registered or qualified for sale in the state or an
exemption from registration or qualification requirement is available and is
complied with.
All expenses relating to the offering and sale of the common stock, other
than commissions, discounts and fees of underwriters, broker-dealers or agents,
and subject to our right to receive payments from one of the selling
stockholders pursuant to a letter agreement, will be paid by us. We have agreed
to indemnify the selling stockholders against some losses, claims, damages,
actions, liabilities, costs and expenses, including liabilities under the
Securities Act of 1933. See "Registration Rights of the Selling Stockholders,"
beginning on page 35.
39
EXPERTS
The financial statements of Boston Properties, Inc. incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
December 31, 2001 have been so incorporated in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters, including the validity of the common stock offered
through this prospectus, will be passed upon for us by Goodwin Procter LLP.
Gilbert G. Menna, the sole stockholder of Gilbert G. Menna, P.C., a partner of
Goodwin Procter LLP, serves as one of our Assistant Secretaries. Mr. Menna, and
other partners of Goodwin Procter LLP, together own approximately 20,000 shares
of our common stock. Goodwin Procter LLP occupies approximately 54,043 square
feet at our property at 599 Lexington Avenue, New York, New York under a lease
that expires in 2008.
VALIDITY OF COMMON STOCK
The validity of the common stock we are offering will be passed upon for us
by Goodwin Procter LLP, Boston, Massachusetts.
40
============================================================ ========================================
You should rely only on the information contained
in this prospectus, incorporated herein by reference
or contained in a prospectus supplement. 1,066,229 Shares
Neither we nor the selling stockholders have of Common Stock
authorized anyone else to provide you with different
or additional information. The selling stockholders
are not making an offer of these securities in any
state where the offer is not permitted. You should
not assume that the information in this prospectus,
or incorporated herein by reference, or in any Boston Properties, Inc.
prospectus supplement is accurate as of any date
other than the date on the front of those documents.
--------------------
TABLE OF CONTENTS
Page
----
Prospectus Summary................................ 2
Risk Factors...................................... 4
Where You Can Find More Information............... 18
Incorporation of Documents By Reference........... 19
Forward-Looking Statements........................ 20 ____________________
Our Company....................................... 21
Description of Common Stock....................... 22 Prospectus
Limits on Ownership of Our Stock.................. 26
Important Provisions of Delaware Law ______________________
and Our Certificate of Incorporation
and Bylaws...................................... 28
Federal Income Tax Considerations and
Consequences of Your Investment................. 31
Registration Rights of the Selling
Stockholders.................................... 35
The Selling Stockholders.......................... 36
Use of Proceeds................................... 38
Plan of Distribution.............................. 38
Experts........................................... 40
Legal Matters..................................... 40 _________, 2002
Validity of Common Stock.......................... 40
--------------------
============================================================ ========================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
Registration fee -- Securities and Exchange Commission...... $ 3,663.78
Accountants' fees and expenses*............................. 5,000.00
Blue Sky fees and expenses*................................. 1,500.00
Legal fees and expenses (other than Blue Sky)*.............. 7,500.00
Printing expenses*.......................................... 2,000.00
Miscellaneous............................................... 2,336.22
TOTAL....................................................... $ 22,000.00
=========
Except as noted, all expenses in connection with the issuance and
distribution of the securities being offered shall be borne by Boston
Properties, Inc. Expenses identified by an asterisk(*) will be borne in part by
Boston Properties, Inc., but are also subject to our right to receive payments
from one of the selling stockholders pursuant to a letter agreement.
Item 15. Indemnification of Directors and Officers.
Our certificate of incorporation and bylaws provide certain limitations on
the liability of our directors and officers for monetary damages to Boston
Properties. Our certificate of incorporation and bylaws obligate Boston
Properties to indemnify its directors and officers, and permit Boston Properties
to indemnify its employees and other agents, against certain liabilities
incurred in connection with their service in such capacities. These provisions
could reduce the legal remedies available to Boston Properties and our
stockholders against these individuals.
Our certificate of incorporation limits the liability of our directors and
officers to Boston Properties to the fullest extent permitted from time to time
by the Delaware General Corporation Law. The Delaware General Corporation Law
permits, but does not require, a corporation to indemnify its directors,
officers, employees or agents and expressly provides that the indemnification
provided for under the Delaware General Corporation Law shall not be deemed
exclusive of any indemnification right under any bylaw, vote of stockholders or
disinterested directors, or otherwise. The Delaware General Corporation Law
permits indemnification against expenses and certain other liabilities arising
out of legal actions brought or threatened against such persons for their
conduct on behalf of the corporation, provided that each such person acted in
good faith and in a manner that he reasonably believed was in or not opposed to
the corporation's best interests and in the case of a criminal proceeding, had
no reasonable cause to believe his or her conduct was unlawful. The Delaware
General Corporation Law does not allow indemnification of directors in the case
of an action by or in the right of the corporation (including stockholder
derivative suits) unless the directors successfully defend the action or
indemnification is ordered by the court.
Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. The provision does not alter a
director's liability under the federal securities laws. In addition, this
provision does not affect the availability of equitable remedies, such as an
injunction or rescission, for breach of fiduciary duty.
II-1
Our bylaws provide that our directors and officers will be, and, in the
discretion of our board of directors, non-officer employees may be, indemnified
by us to the fullest extent authorized by Delaware law, as it now exists or may
in the future be amended, against all expenses and liabilities actually and
reasonably incurred in connection with service for or on behalf of Boston
Properties. Our bylaws also provide that the right of directors and officers to
indemnification shall be a contract right and shall not be exclusive of any
other right now possessed or hereafter acquired under any bylaw, agreement, vote
of stockholders, or otherwise.
We have entered into indemnification agreements with each of our directors
and executive officers. The indemnification agreements require, among other
matters, that we indemnify our directors and officers to the fullest extent
permitted by law and advance to the directors and officers all related expenses,
subject to reimbursement if it is subsequently determined that indemnification
is not permitted. Under these agreements, we must also indemnify and advance all
expenses incurred by directors and officers seeking to enforce their rights
under the indemnification agreements and may cover directors and officers under
our directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by law, it provides additional assurance to directors and officers that
indemnification will be available because, as a contract, it cannot be modified
unilaterally in the future by our board of directors or our stockholders to
eliminate the rights it provides. It is the position of the Securities and
Exchange Commission that indemnification of directors and officers for
liabilities under the Securities Act of 1933 is against public policy and
unenforceable pursuant to Section 14 of the Securities Act of 1933.
II-2
Item 16. Exhibits.
-------- ---------
4.1 Amended and Restated Certificate of Incorporation of Boston
Properties, Inc. (incorporated herein by reference to Boston
Properties, Inc.'s Registration Statement on Form S-11 (File No.
333-25279)).
4.2 Amended and Restated Bylaws of Boston Properties, Inc. (incorporated
herein by reference to Boston Properties, Inc.'s Registration
Statement on Form S-11 (File No. 333-25279)).
4.3 Second Amended and Restated Agreement of Limited Partnership of Boston
Properties Limited Partnership (incorporated herein by reference to
Boston Properties, Inc.'s Current Report on Form 8-K dated June 30,
1998, filed with the Commission on July 15, 1998).
4.4 Shareholder Rights Agreement dated as of June 16, 1997 between Boston
Properties, Inc. and Fleet National Bank (f.k.a. BankBoston, N.A.), as
Rights Agent (incorporated herein by reference to Boston Properties,
Inc.'s Registration Statement on Form S-11 (File No. 333-25279)).
*5.1 Opinion of Goodwin Procter LLP as to the legality of the securities
and interests being registered.
**8.1 Opinion of Goodwin Procter LLP as to certain tax matters.
**23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
*23.2 Consent of Goodwin Procter LLP (included as part of Exhibits 5.1 and
8.1).
*24.1 Powers of Attorney (included on the signature page of the Registration
Statement as filed).
*99.1 Registration Rights Agreements, dated as of July 8, 2002, by and
between Boston Properties, Inc., Boston Properties Limited Partnership
and the selling stockholders.
--------------------------
* Previously filed
** Filed herewith
II-3
Item 17. Undertakings.
(a) Boston Properties, Inc. hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this Registration Statement, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by Boston Properties pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Boston Properties hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of Boston
Properties' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Boston Properties pursuant to the foregoing provisions, or otherwise, Boston
Properties has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Boston Properties of expenses incurred or paid by a director, officer or
controlling person of Boston Properties in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, Boston Properties will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Boston
Properties, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, the Commonwealth of Massachusetts, on
this 5th day of August, 2002.
BOSTON PROPERTIES, INC.
By: /s/ Edward H. Linde
----------------------------
Name: Edward H. Linde
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
*
---------------------------------- Chairman of the Board of Directors August 5, 2002
Mortimer B Zuckerman
/s/ Edward H. Linde
---------------------------------- President and Chief Executive Officer, August 5, 2002
Edward H. Linde Director (Principal Executive Officer)
*
---------------------------------- Chief Financial Officer (Principal Financial August 5, 2002
Douglas T. Linde Officer and Principal Accounting Officer)
*
---------------------------------- Director August 5, 2002
Alan J. Patricof
*
---------------------------------- Director August 5, 2002
Ivan G. Seidenberg
*
---------------------------------- Director August 5, 2002
Martin Turchin
*
---------------------------------- Director August 5, 2002
Alan B. Landis
*
---------------------------------- Director August 5, 2002
Richard A. Salomon
* By: /s/ Edward H. Linde
---------------------
Edward H. Linde
Attorney-in-Fact
II-5
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Amended and Restated Certificate of Incorporation of Boston
Properties, Inc. (incorporated herein by reference to Boston
Properties, Inc.'s Registration Statement on Form S-11 (File No.
333-25279)).
4.2 Amended and Restated Bylaws of Boston Properties, Inc.
(incorporated herein by reference to Boston Properties, Inc.'s
Registration Statement on Form S-11 (File No. 333-25279)).
4.3 Second Amended and Restated Agreement of Limited Partnership of
Boston Properties Limited Partnership (incorporated herein by
reference to Boston Properties, Inc.'s Current Report on Form 8-K
dated June 30, 1998, filed with the Commission on July 15, 1998).
4.4 Shareholder Rights Agreement dated as of June 16, 1997 between
Boston Properties, Inc. and Fleet National Bank (f.k.a.
BankBoston, N.A.), as Rights Agent (incorporated herein by
reference to Boston Properties, Inc.'s Registration Statement on
Form S-11 (File No. 333-25279)).
*5.1 Opinion of Goodwin Procter LLP as to the legality of the
securities and interests being registered.
**8.1 Opinion of Goodwin Procter LLP as to certain tax matters.
**23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
*23.2 Consent of Goodwin Procter LLP (included as part of Exhibits
5.1 and 8.1).
*24.1 Powers of Attorney (included on the signature page of the
Registration Statement as filed).
*99.1 Registration Rights Agreements, dated as of July 8, 2002, by and
between Boston Properties, Inc., Boston Properties Limited
Partnership and the selling stockholders.
------------------------
* Previously filed
** Filed herewith
II-6