MISCELLANEOUS RIGHTS AGREEMENT
THIS MISCELLANEOUS RIGHTS AGREEMENT, dated as of September ___, 1996,
is entered into by and among Arden Realty, Inc., a Maryland corporation (the
"Company" or the "REIT"), Arden Realty Limited Partnership, a Maryland limited
partnership (the "Operating Partnership"), NAMIZ, Inc. (formerly Arden Realty,
Inc.), a California corporation ("Arden") and Xxxxxxx X. Xxxxx.
RECITALS
WHEREAS, in connection with the initial public offering of shares of
the Company's common stock, par value $.01 per share (the "Common Stock"), the
Company, the Operating Partnership and Arden, together with the partners and
members of certain Arden-affiliated entities (the "Arden Predecessors") and
other parties which hold ownership interests in certain office properties (the
"Properties") (collectively the "Participants") will engage in certain
formation transactions whereby: (i) certain Participants will contribute to the
Operating Partnership, their interests in the Arden Predecessors (the
"Partnership Interests") and in certain of the Properties and (ii) Arden will
contribute to the Operating Partnership certain of its assets, including
management contracts relating to certain of the Properties and the contract
rights to purchase 303 Glenoaks and 00000 Xxxx Xxxxxxxx Xxxxxxx (the
"Acquisition Properties") and transfer certain of its liabilities
(collectively, the "Contributions");
WHEREAS, Arden and such Participants will receive units of limited
partnership interests ("OP Units") in the Operating Partnership in exchange for
the Contributions and the Company will be the general partner of the Operating
Partnership;
WHEREAS, pursuant to the Partnership Agreement (as defined below) OP
Units owned by Arden Persons (as defined below) will be redeemable for cash or
exchangeable for shares of Common Stock of the Company upon the terms and
subject to the conditions contained therein;
WHEREAS, Arden and the Participants are willing to make the
Contributions in consideration of receiving the registration rights and, with
respect to Xxxxxxx X. Xxxxx, the proportional purchase rights provided for in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. In addition to the definitions set forth
above, the following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition,
"control" when used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Miscellaneous Rights Agreement, as it may be
amended, supplemented or restated from time to time.
"Arden Persons" mean (i) Arden and the Arden Predecessors and (ii)
the current and future stockholders of Arden, any Affiliates of such
stockholders and the Immediate Family of such stockholders.
"Articles of Incorporation" means the Amended and Restated Articles
of Incorporation of the Company as filed with the Secretary of State of the
State of Maryland on May 1, 1996, as the same may be amended, modified or
restated from time to time.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York or Los Angeles, California
are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time or any successor statute thereto, as interpreted by the applicable
regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Convertible Securities" means any evidence of indebtedness, shares
of stock, options, warrants or other securities which are convertible into or
exchangeable, with or without payment of additional consideration of cash or
property, for shares of Common Stock or rights to acquire shares of Common
Stock, either immediately or on a specified date or the happening of a
specified event.
"Demand Registration" means a Demand Registration as defined in
Section 2.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable OP Units" means OP Units which may be redeemable for
cash or exchangeable for Common Stock pursuant to Section 8.6 of the
Partnership Agreement (without regard to any limitations on the exercise of
such exchange right as a result of the Ownership Limit Provisions).
"General Partner" means the Company or its successors as general
partner of the Operating Partnership.
"Holder" means any Arden Person who is the record or beneficial owner
of any Registrable Security or any assignee or transferee of such Registrable
Security (including assignments or transfers of Registrable Securities to such
assignees or transferees as a result of the foreclosure on any loans secured by
such Registrable Securities) unless such Registrable
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Security is acquired in a public distribution pursuant to a registration
statement under the Securities Act or pursuant to transactions exempt from
registration under the Securities Act where securities sold in such
transaction may be resold without subsequent registration under the
Securities Act.
"Immediate Family" of any individual means such individual's estate
and heirs, spouse, children (whether natural or adoptive or by marriage), and
any trust or estate, all the beneficiaries of which consist of such individual
or any of the foregoing.
"Incapacitated" shall have the meaning set forth in the Partnership
Agreement.
"Initial Public Offering" means the offering of the Company's Common
Stock pursuant to the Form S-11 Registration Statement (No. 333-8163) filed by
the Company with the Commission under the Securities Act.
"Market Value" means, with respect to the Common Stock, the average
of the daily market price for the ten (10) consecutive trading days immediately
preceding the date of a written request for registration pursuant to Section
2.2(a). The market price for each such trading day shall be: (i) if the Common
Stock is listed or admitted to trading on any securities exchange or the NASDAQ-
National Market System, the closing price, regular way, on such day, or if no
such sale takes place on such day, the average of the closing bid and asked
prices on such day, in either case as reported in the principal consolidated
transaction reporting system, (ii) if the Common Stock is not listed or
admitted to trading on any securities exchange or the NASDAQ-National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the Company, or (iii) if
the Common Stock is not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System and no such last reported sale
price or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reliable
quotation source designated by the Company, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than (10) days prior to the date
in question) for which prices have been so reported; PROVIDED THAT if there are
no bid and asked prices reported during the ten (10) days prior to the date in
question, the Market Value of the Common Stock shall be determined by the
Company acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
"Ownership Limit Provisions" mean the various provisions of the
Company's Charter set forth in ARTICLE SEVENTH thereof restricting the
ownership of Common Stock by certain Persons to specified percentages of the
outstanding Common Stock.
"Partnership Agreement" means the amended and restated agreement of
limited partnership of the Operating Partnership dated as of September ___,
1996, as the same may be amended, modified or restated from time to time.
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"Person" means an individual or a corporation, partnership, limited
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Piggy-Back Registration" means a Piggy-Back Registration as defined
in Section 2.3.
"Purchase Percentage" means at any time, with respect to any Arden
Person, the ratio (expressed as a decimal and rounded to the nearest thousandth
with five ten thousandths being rounded upwards) of (i) the sum of (a) the
number of shares of Common Stock then owned directly or indirectly by such
Arden Person and (b) the REIT Shares Amount applicable to the Exchangeable OP
Units then owned directly or indirectly by such Arden Person, over (ii) the sum
of (a) the total number of shares of Common Stock then outstanding and (b) the
REIT Shares Amount applicable to all Exchangeable OP Units then outstanding.
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" means a share of common stock of the General Partner
"REIT Shares Amount" means, as of any date, an aggregate number of
REIT Shares equal to the number of Tendered Units (assuming all Holders of
Exchangeable OP Units have tendered all of their Exchangeable OP Units), as
adjusted pursuant to Section 7.5 of the Partnership Agreement (in the event the
General Partner acquires material assets, other than on behalf of the Operating
Partnership) and for stock dividends and distributions, stock splits and
subdivisions, reverse stock splits and combinations, distributions of rights,
warrants or options, and distributions of evidences of indebtedness or assets
relating to assets not received by the General Partner pursuant to a PRO RATA
distribution by the Operating Partnership.
"Registrable Securities" means shares of Common Stock of the Company
at any time owned, either of record or beneficially, by any Arden Person and no
matter how acquired (including, without limitation, shares of Common Stock
issuable upon exchange of Exchangeable OP Units) until (i) a registration
statement covering such security has been declared effective by the Commission
and it has been disposed of pursuant to such effective registration statement,
(ii) it is sold under circumstances in which all of the applicable conditions
of Rule 144 (or any similar provisions then in force) under the Securities Act
are met or under which it may be sold pursuant to Rule 144(k) or (iii) it has
been otherwise transferred in a transaction that would constitute a sale
thereof under the Securities Act, the Company has delivered a new certificate
or other evidence of ownership for it not bearing the Securities Act restricted
stock legend and it may be resold without subsequent registration under the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Tendered Units" shall have the meaning set forth in Section 8.6.A of
the Partnership Agreement.
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"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. SHELF REGISTRATION. Commencing on or after the first
anniversary of the date that the Common Stock is first offered to the public in
the Initial Public Offering, the Company shall prepare and file a "shelf"
registration statement with respect to shares of Common Stock issuable upon the
exchange of Exchangeable OP Units on an appropriate form for an offering to be
made on a continuous basis pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement") and shall use its best efforts to cause the
Shelf Registration Statement to be declared effective on or as soon as
practicable after such first anniversary, and to keep such Shelf Registration
Statement continuously effective for a period ending when all shares of Common
Stock covered by the Shelf Registration Statement have been issued and resold.
In the event that the Company fails to file, or if filed fails to maintain the
effectiveness of, a Shelf Registration Statement, Holders of shares of Common
Stock issuable upon the exchange of Exchange OP Units may make a written
request for a Demand Registration (as defined below) pursuant to Section 2.2
herein; PROVIDED, FURTHER, that if and so long as a Shelf Registration
Statement is on file and effective, then the Company shall have no obligation
to effect a Demand Registration.
SECTION 2.2. DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. Commencing on or after the first
anniversary of the date that the Common Stock is first offered to the public in
the Initial Public Offering, Holders of Registrable Securities may make a
written request for registration under the Securities Act of all or part of its
or their Registrable Securities (a "Demand Registration"); PROVIDED, that the
Company shall not be obligated to effect more than one Demand Registration in
any calendar year; and PROVIDED, FURTHER, that the number of shares of
Registrable Securities proposed to be sold by the Holders making such written
request shall have a Market Value of at least $5,000,000. Subject to the
foregoing, the number of Demand Registrations which may be made pursuant to
this Section 2.2 shall be unlimited. Any such request will specify the number
of shares of Registrable Securities proposed to be sold and will also specify
the intended method of disposition thereof. Within 10 days after receipt of
such request, the Company will give written notice of such registration request
to all other Holders of the Registrable Securities and include in such
registration all such Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 20 Business Days
after the receipt by the applicable Holder of the Company's notice. Each such
request will also specify the number of shares of Registrable Securities to be
registered and the intended method of disposition thereof. Unless the Holder
or Holders of a majority of the Registrable Securities to be registered in such
Demand Registration shall consent in writing, no other party, including the
Company (but excluding another Holder of a Registrable Security), shall be
permitted to offer securities under any such Demand Registration.
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(b) EFFECTIVE REGISTRATION. A registration will not count as a
Demand Registration until it has become effective.
(c) SELLING HOLDERS BECOME PARTY TO AGREEMENT. Each Holder
acknowledges that by asserting or participating in its registration rights
pursuant to this Article 2, he or she may become a Selling Holder and thereby
will be deemed a party to this Agreement and will be bound by each of its
terms.
(d) PRIORITY ON DEMAND REGISTRATIONS. If the Holders of a
majority of shares of the Registrable Securities to be registered in a Demand
Registration so elect by written notice to the Company, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of an underwritten offering. The Holders of a majority of the shares of
the Registrable Securities making such Demand Registration shall select the
book-running managing Underwriter in connection with such offering; PROVIDED
that such managing Underwriter must be reasonably satisfactory to the Company.
The Company may select any additional investment banks and managers to be used
in connection with the offering; provided that such additional investment
bankers and managers must be reasonably satisfactory to a majority of the
Holders making such Demand Registration. To the extent 10% or more of the
Registrable Securities so requested to be registered are excluded from the
offering in accordance with Section 2.3, the Holders of such Registrable
Securities as a shall have the right to one additional Demand Registration
under this Section in such calendar year with respect to such Registrable
Securities.
SECTION 2.3. PIGGY-BACK REGISTRATION. If the Company proposes to
file a registration statement under the Securities Act with respect to an
equity offering by the Company for its own account or for the account of any of
its respective securityholders of any class of security (other than (i) any
registration statement filed by the Company under the Securities Act relating
to an offering of Common Stock for its own account as a result of the exercise
of the exchange rights set forth in Section 8.6 of the Partnership Agreement,
(ii) any registration statement filed in connection with a Demand Registration
except as set forth in Section 2.2 hereof or (iii) a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the Commission)
or filed in connection with an exchange offer or offering of securities solely
to the Company's existing securityholders), then the Company shall give written
notice of such proposed filing to the Holders of Registrable Securities as soon
as practicable (but in no event less than 10 days before the anticipated filing
date), and such notice shall offer such Holders the opportunity to register
such number of shares of Registrable Securities as each such Holder may request
(a "Piggy-Back Registration"). The Company shall use its commercially
reasonable efforts to cause the managing Underwriter or Underwriters of a
proposed underwritten offering to permit the Registrable Securities requested
to be included in a Piggy-Back Registration to be included on the same terms
and conditions as any similar securities of the Company included therein.
SECTION 2.4. REDUCTION OF OFFERING. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an offering
described in Section 2.2 or 2.3 deliver a written opinion to the Company and
the Holders of the Registrable Securities included in such offering that (i)
the size of the offering that the Holders, the Company and such other
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persons intend to make or (ii) the kind of securities that the Holders, the
Company and any other persons or entities intend to include in such offering
are such that the success of the offering would be materially and adversely
affected by inclusion of the Registrable Securities requested to be included,
then (A) if the size of the offering is the basis of such Underwriter's
opinion, the amount of securities to be offered for the accounts of Holders
shall be reduced pro rata (according to the Registrable Securities proposed
for registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing Underwriter or Underwriters; PROVIDED that, in the case of a
Piggy-Back Registration, if securities are being offered for the account of
other persons or entities as well as the Company, then with respect to the
Registrable securities intended to be offered by Holders, the proportion by
which the amount of such class of securities intended to be offered by
Holders is reduced shall not exceed the proportion by which the amount of
such class of securities intended to be offered by such other persons or
entities is reduced; and (B) if the combination of securities to be offered
is the basis of such Underwriter's opinion, (x) the Registrable Securities to
be included in such offering shall be reduced as described in clause (A)
above (subject to the proviso in clause (A)) or, (y) if the actions described
in clause (x) would, in the judgment of the managing Underwriter, be
insufficient to substantially eliminate the adverse effect that inclusion of
the Registrable Securities requested to be included would have on such
offering, such Registrable Securities will be excluded from such offering.
SECTION 2.5. REGISTRATION PROCEDURES; FILINGS; INFORMATION. In
connection with any Shelf Registration Statement under Section 2.1 or whenever
Holders request that any Registrable Securities be registered pursuant to
Section 2.2 hereof, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as quickly as practicable, and in
connection with any such request:
(a) The Company will as expeditiously as possible prepare and
file with the Commission a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate
and which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 270 days; PROVIDED
that if the Company shall furnish to the Holders making a request pursuant to
Section 2.2 a certificate signed by either its Chairman, Vice Chairman, Chief
Executive Officer or President stating that in his good faith judgment it would
be significantly disadvantageous to the Company or its shareholders for such a
registration statement to be filed as expeditiously as possible, the Company
shall have a period of not more than 180 days within which to file such
registration statement measured from the date of receipt of the request in
accordance with Section 2.2.
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to each Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter furnish to such Selling
Holder and Underwriter, if any, such number of conformed copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and
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documents incorporated by reference therein), the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as such Selling Holder or Underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
such Selling Holder.
(c) After the filing of the registration statement, the Company
will promptly notify each Selling Holder of Registrable Securities covered by
such registration statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States as any Selling Holder or managing
Underwriter or Underwriters, if any, reasonably (in light of such Selling
Holder's intended plan of distribution) requests and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Selling Holder to
consummate the disposition of the Registrable Securities owned by such Selling
Holder; PROVIDED that the Company will not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction.
(e) The Company will immediately notify each Selling Holder of
such Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an
event requiring the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and promptly make
available to each Selling Holder any such supplement or amendment.
(f) The Company will enter into customary agreements (including
an underwriting agreement, if any, in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(g) The Company will make available for inspection by any
Selling Holder of such Registrable Securities, any Underwriter participating
in any disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration statement.
Records which the Company determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is
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necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction. Each Selling
Holder of such Registrable Securities agrees that information obtained by it
as a result of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities of the
company or its Affiliates unless and until such is made generally available
to the public. Each Selling Holder of such Registrable Securities further
agrees that it will, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction, give notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling Holder or
Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Holders of a majority of the Registrable Securities included in such offering
or the managing Underwriter or Underwriters therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 of the Commission promulgated thereunder (or any successor rule or
regulation hereafter adopted by the Commission).
(j) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
The Company may require each Selling Holder of Registrable
Securities to promptly furnish in writing to the Company such information
regarding the distribution of the Registrable Securities as the Company may
from time to time reasonably request and such other information as may be
legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
2.5(e) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.5(e) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
all copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. Each Selling Holder of Registrable
Securities agrees that it will immediately notify the Company at any time when
a prospectus relating to the registration of such Registrable securities is
required to be
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delivered under the Securities Act of the happening of an event as a result
of which information previously furnished by such Selling Holder to the
Company in writing for inclusion in such prospectus contains an untrue
statement of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made. In the event the
Company shall give such notice, the Company shall extend the period during
which such registration statement shall be maintained effective (including
the period referred to in Section 2.5(a) hereof) by the number of days during
the period from and including the date of the giving of notice pursuant to
Section 2.5(e) hereof to the date when the Company shall make available to
the Selling Holders of Registrable Securities covered by such registration
statement a prospectus supplemented or amended to conform with the
requirements of Section 2.5(e) hereof.
SECTION 2.6. REGISTRATION EXPENSES. In connection with any
registration statement required to be filed hereunder, the Company shall pay
the following registration expenses incurred in connection with the
registration hereunder (the "Registration Expenses"): (i) all registration and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) printing
expenses, (iv) internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection with the listing of
the Registrable Securities, (vi) reasonable fees and disbursements of counsel
for the Company and customary fees and expenses for independent certified
public accountants retained by the Company (including the expenses of any
comfort letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters requested pursuant to
Section 2.5(h) hereof), (vii) the reasonable fees and expenses of any special
experts retained by the Company in connection with such registration, and
(viii) reasonable fees and expenses of one counsel (who shall be reasonably
acceptable to the Company) for the Selling Holders. The Company shall have no
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or any out-of-pocket expenses of the
Holders (or the agents who manage their accounts).
SECTION 2.7. INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify and hold harmless each Selling Holder of Registrable Securities,
its officers, directors and agents, and each Person, if any, who controls
such Selling Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Securities (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) or
any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for inclusion therein. The Company also agrees to
indemnify any Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such underwriters within the meaning
of Section 15 of the Securities Act or Section 20
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of the Exchange Act on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 2.7 provided
that the foregoing indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter of the Registrable Securities
from whom the person asserting any such losses, claims, damages or
liabilities purchased the Registrable Securities which are the subject
thereof if such person did not receive a copy of the prospectus (or the
prospectus as supplemented) at or prior to the confirmation of the sale of
such Registrable Securities to such person in any case where such delivery is
required by the Securities Act and the untrue statement or omission of a
material fact contained in such preliminary prospectus was corrected in the
prospectus (or the prospectus as supplemented).
SECTION 2.8. INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors and agents and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case
any action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by Section 2.7. Each Selling Holder
also agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act on substantially the same basis as that of the
indemnification of the Company provided in this Section 2.8.
SECTION 2.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 2.7 or 2.8, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (an "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Party, and shall assume the payment of all fees and expenses. In
any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnified Party and the Indemnifying Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for all such Indemnified Parties, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Indemnified Parties, such firm shall be
designated in writing by (i) in the case of Persons
11
indemnified pursuant to Section 2.7, Arden if Arden was a Selling Holder or
if Arden was not a Selling Holder, by the Selling Holders which owned a
majority of the Registrable Securities sold under the applicable registration
statement and (ii) in the case of Persons indemnified pursuant to Section
2.8, the Company. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above)
by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified Party for fees and expenses
of counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 Business Days after receipt by such Indemnifying
Party of the aforesaid request and (ii) such Indemnifying Party shall not
have reimbursed the Indemnified Party in accordance with such request prior
to the date of such settlement. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of with any Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such
proceeding.
SECTION 2.10. CONTRIBUTION. If the indemnification provided for
in Section 2.7 or 2.8 hereof is unavailable to an Indemnified Party or
insufficient in respect of any losses, claims, damages or liabilities
referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) as between the Company and the Selling Holders on the one
hand and the Underwriters on the other, in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Holders on the one hand and the Underwriters on the other from the offering
of the securities, or if such allocation is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company and the Selling Holders
on the one hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii)
as between the Company on the one hand and each Selling Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of each Selling Holder in connection with such statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the
Selling Holders on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Selling Holders or by the
12
Underwriters. The relative fault of the Company on the one hand and of each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 2.10 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 2.10, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Selling Holder's obligations to contribute
pursuant to this Section 2.10 are several in proportion to the proceeds of the
offering received by such Selling Holder bears to the total proceeds of the
offering received by all the Selling Holders and not joint.
SECTION 2.11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights provided for in this Article II.
SECTION 2.12. RULE 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any
Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
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SECTION 2.13. HOLDBACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE
SECURITIES. To the extent not inconsistent with applicable law, each Holder
whose securities are included in a registration statement agrees not to effect
any sale or distribution of the issue being registered or a similar security of
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, including a sale pursuant to Rule 144 under the Securities
Act, during the 14 days prior to, and during the 90-day period beginning on,
the effective date of such registration statement (except as part of such
registration), if and to the extent requested in writing by the Company in the
case of a non-underwritten public offering or if and to the extent requested in
writing by the managing underwriter or Underwriters in the case of an
underwritten public offering.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The
Company agrees (i) not to effect any sale or distribution of any securities
similar to those being registered in accordance with Section 2.2 or Section 2.3
hereof, or any securities convertible into or exchangeable or exercisable for
such securities, during the 14 days prior to, and during the 90-day period
beginning on, the effective date of any registration statement (except as part
of such registration statement where the Holders of a majority of the
Registrable Securities to be included in such registration statement consent or
as part of registration statements filed as set forth in Section 2.3(i) or
(iii)) or the commencement of a public distribution of Registrable Securities,
if and to the extent requested in writing by the Company in the case of a non-
underwritten public offering or if and to the extent requested in writing by
the managing Underwriter or Underwriters in the case of an underwritten public
offering; and (ii) that any agreement entered into after the date of the
Agreement pursuant to which the Company issues or agrees to issue any privately
placed securities shall contain a provision under which holders of such
securities agree not to effect any sale or distribution of any such securities
during the periods described in (i) above, in each case including a sale
pursuant to Rule 144 under the Securities Act (except as part of any such
registration, if permitted); PROVIDED, however, that the provisions of this
paragraph (b) shall not prevent the conversion or exchange of any securities
pursuant to their terms into or for other securities.
(c) If the Company determines in its good faith judgment that
the filing of the Shelf Registration Statement under Section 2.1 or a Demand
Registration under Section 2.2 hereof or the use of any related prospectus
would require the disclosure of material information that the Company has a
bona fide business purpose for preserving as confidential or the disclosure of
which would impede the Company's ability to consummate a significant
transaction, and that the Company is not otherwise required by applicable
securities laws or regulations to disclose, upon written notice of such
determination by the Company, the rights of the Holders to offer, sell or
distribute any Registrable Securities pursuant to the Shelf Registration
Statement or a Demand Registration or to require the Company to take action
with respect to the registration or sale of any Registrable Securities pursuant
to the Shelf Registration Statement or a Demand Registration shall be suspended
until the date upon which the Company notifies the Holders in writing that
suspension of such rights for the grounds set forth in this Section 2.12(c) is
no longer necessary, and the Company agrees to give such notice as promptly as
practicable following the date that such suspension of rights is no longer
necessary.
14
(d) If all reports required to be filed by the Company pursuant
to the Exchange Act have not been filed by the required date without regard to
any extension, or if the consummation of any business combination by the
Company has occurred or is probable for purposes of Rule 3-05 or Article 11 of
Regulation S-X under the Act, upon written notice thereof by the Company to the
Holders, the rights of the Holders to offer, sell or distribute any Registrable
Securities pursuant to the Shelf Registration Statement or a Demand
Registration or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to the Shelf
Registration Statement or a Demand Registration shall be suspended until the
date on which the Company has filed such reports or obtained and filed the
financial information required by Rule 3-05 or Article 11 of Regulation S-X to
be included or incorporated by reference, as applicable, in the Shelf
Registration Statement, and the Company shall notify the Holders as promptly as
practicable when such suspension is no longer required.
ARTICLE III
PROPORTIONAL PURCHASE
SECTION 3.1. PROPORTIONAL PURCHASE RIGHTS. If from time to
time the Purchase Percentage owned directly or indirectly by Xxxxxxx X. Xxxxx
would be reduced as a result of any issuance of Common Stock by the Company or
could be reduced as a result of any issuance of Convertible Securities
(assuming, in the case of Convertible Securities, the conversion, exchange, or
exercise at such time of the all Convertible Securities to be issued in such
issuance) by the Company (in either case, whether for cash, property or
otherwise) and so long as Xx. Xxxxx serves as the Company's Chief Executive
Officer, the Company shall so notify Xx. Xxxxx in writing not less than 5 days
prior to the proposed date of (a) circulation of any offering memorandum or
prospectus relating to any such issuance or (b) if no offering memorandum or
prospectus will be used, any such issuance and shall offer to sell to Xx.
Xxxxx, and, if such offer is accepted in writing by the (i) day prior to the
date of any circulation of any offering memorandum or prospectus or (ii) if no
offering memorandum or prospectus will be used (x) if such issuance is made
pursuant to an underwriting or private placement purchase agreement, the day
such agreement is executed (it being understood that the Company will give Xx.
Xxxxx at least one Business Day's prior notice of such date of execution) or
(y) if such issuance is not made pursuant to such an agreement, the Business
Day prior to the proposed date of such issuance, the Company shall sell Xx.
Xxxxx, that number of shares of Common Stock or the number or amount of
Convertible Securities to be issued which would result in the Purchase
Percentage of Xx. Xxxxx immediately after such issuance equaling the Purchase
Percentage owned directly or indirectly by Xx. Xxxxx immediately prior to such
issuance (assuming, in the case of Convertible Securities, the conversion,
exchange or exercise at such time of all Convertible Securities to be issued in
such issuance), or any lesser amount of Common Stock or Convertible Securities
to be issued in such issuance as may be designated by Xx. Xxxxx, in either case
at a price per share or other trading unit of such Common Stock or Convertible
Securities, as the case may be, to be received by the Company in such issuance,
less any underwriting discounts and commissions, and otherwise on the same
terms as may be applicable to such issuance; PROVIDED, HOWEVER, that this
Section 3.1 shall not be applicable to (i) any issuance of Common Stock in the
Initial Public Offering or (ii) any issuance of Common Stock or Convertible
Securities to directors, officers or employees of the Company or any of its
subsidiaries (including the Operating Partnership) pursuant to any employee
benefit plan or dividend reinvestment plan,
15
(iii) any issuance of Common Stock by the Company as a result of the exercise
of the exchange rights set forth in Section 8.6 of the Partnership Agreement
or (iv) any issuance of Common Stock or OP Units incident to an acquisition
of properties, assets or a business. Notwithstanding anything to the contrary
herein, Xx. Xxxxx shall not be permitted to exercise the rights provided by
this Section 3.1 to the extent that such exercise would result in a violation
of the Ownership Limit Provisions.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. NEW YORK STOCK EXCHANGE LISTING. In the event that the
Company shall issue any Common Stock in exchange for OP Units pursuant to
Section 8.6 of the Partnership Agreement, then in any such case the Company
agrees to cause any such shares of Common Stock to be listed on the New York
Stock Exchange prior to or concurrently with the issuance thereof by the
Company.
SECTION 4.2. REMEDIES. In addition to being entitled to exercise
all rights provided herein and granted by law, including recovery of damages,
the Arden Persons shall be entitled to specific performance of the rights under
this Agreement; provided that only Xx. Xxxxx may enforce his rights under
Article III. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
SECTION 4.3. AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Arden or its representative if Arden is Incapacitated. No failure
or delay by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon any breach thereof shall constitute waiver of any such
breach or any other covenant, duty, agreement or condition.
SECTION 4.4. NOTICES. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to any Arden Person, initially c/o NAMIZ, Inc., 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 000X, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (Attention: Chief
Executive Officer), or to such other address and to such other Persons as Arden
may hereafter specify in writing; and
(2) if to the Company, initially at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx
000X, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (Attention: President), or to such other
address as the Company may hereafter specify in writing.
16
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when received if
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business
day, if timely delivered to an air courier guaranteeing overnight delivery.
SECTION 4.5. SUCCESSORS AND ASSIGNS. Except as expressly provided
in this Agreement the rights and obligations of the Arden Persons under this
Agreement shall not be assignable by any Arden Person to any Person that is not
an Arden Person. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns.
SECTION 4.6. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Each party shall
become bound by this Agreement immediately upon affixing its signature hereto.
SECTION 4.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
without regard to the choice of law provisions thereof.
SECTION 4.8. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
SECTION 4.9. ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
such subject matter.
SECTION 4.10. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 4.11. NO THIRD PARTY BENEFICIARIES. Nothing express or
implied herein is intended or shall be construed to confer upon any person or
entity, other than the parties hereto and their respective successors and
assigns, any rights, remedies or other benefits under or by reason of this
Agreement.
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
ARDEN REALTY, INC.,
a Maryland corporation
By:
-----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership
By: Arden Realty, Inc.
General Partner
By:
-----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
NAMIZ, INC.,
a California corporation
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
XXXXXXX X. XXXXX
--------------------------------------------
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