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CONTRIBUTION AGREEMENT
by and between
ARDEN REALTY GROUP, INC.,
a California corporation
and
ARDEN REALTY GROUP LIMITED PARTNERSHIP,
a Maryland limited partnership
Dated as of June 17, 1996
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TABLE OF CONTENTS
PAGE
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
TERMS OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. CONTRIBUTION OF MANAGEMENT ASSETS AND EXCHANGE FOR OP UNITS. . . . . . . 2
1.1 Contribution Transaction. . . . . . . . . . . . . . . . . . . . . . 2
1.2 Minimum Consideration and Exchange of OP Units. . . . . . . . . . 2
1.3 Additional Consideration. . . . . . . . . . . . . . . . . . . . . 2
1.4 Adjusted Consideration. . . . . . . . . . . . . . . . . . . . . . 3
1.5 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Contribution of Certain Rights. . . . . . . . . . . . . . . . . . 3
1.7 Treatment as Contribution . . . . . . . . . . . . . . . . . . . . 3
2. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Time and Place. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 5
3.1 Representations and Warranties of the Operating Partnership . . . 5
3.2 Representations and Warranties of Contributor . . . . . . . . . . 6
4. COVENANTS OF CONTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . 6
5. RELEASES AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 General Release of Operating Partnership. . . . . . . . . . . . . 7
5.2 General Release of Optionor . . . . . . . . . . . . . . . . . . . 7
5.3 Waiver of Section 1542 Protections. . . . . . . . . . . . . . . . 8
6. POWER OF ATTORNEY
6.1 Grant of Power of Attorney. . . . . . . . . . . . . . . . . . . . 8
6.2 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . 9
i
7. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ii
EXHIBIT LIST
SECTION FIRST
EXHIBITS REFERENCED
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A Management Assets to be Contributed. . . . . . . . . . . . . . Recital D
B Assignment and Assumption Agreement. . . . . . . . . . . . . . . . . 1.1
C Xxxx of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
D Representations and Warranties of Contributor. . . . . . . . . . . . 3.2
iii
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (hereinafter referred to as the
"CONTRIBUTION AGREEMENT") is made and entered into as of June 17, 1996 by and
between Arden Realty Group Limited Partnership, a Maryland limited partnership
(the "OPERATING PARTNERSHIP"), and Arden Realty Group, Inc., a California
corporation (the "CONTRIBUTOR").
RECITALS
A. The Operating Partnership desires to consolidate the ownership of
a portfolio of office properties (the "PARTICIPATING PROPERTIES") located in
Southern California through a series of transactions (the "FORMATION
TRANSACTIONS") whereby the Operating Partnership will acquire direct interests
in certain of the Participating Properties (the "PROPERTY INTERESTS") and all of
the interests in certain limited partnerships, certain limited liability
companies and certain other entities (collectively the "PARTICIPATING
PARTNERSHIPS AND LLCS") which currently own directly or indirectly the
Participating Properties (the "CONSOLIDATION").
B. The Formation Transactions relate to the proposed initial public
offering (the "PUBLIC OFFERING") of the common stock of Arden Realty Group,
Inc., a Maryland corporation (the "COMPANY"), which will operate as a
self-administered and self-managed real estate investment trust ("REIT")
and will be the sole general partner of the Operating Partnership.
C. The owners of the Property Interests and the partners and members
of the Participating Partnerships and LLCs will either transfer their Property
Interests and interests in the Participating Partnerships and LLCs to the
Company in exchange for cash (the "CASH PARTICIPANTS") or contribute such
interests directly to the Operating Partnership in exchange for an interest in
the Operating Partnership (the "OP PARTICIPANTS").
D. As part of the Formation Transactions, the Contributor desires
to, and the Operating Partnership desires the Contributor to, contribute to the
Operating Partnership, all of its right, title and interest, in certain assets,
personal property and management contracts as set forth on EXHIBIT "A" that
relate to its property management and leasing business (the "MANAGEMENT
BUSINESS")(such right, title and interest are hereinafter collectively referred
to as the "MANAGEMENT ASSETS"), in exchange for partnership units in the
Operating Partnership (the "OP UNITS"), on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, for and in consideration of the foregoing premises, and the
mutual undertakings set forth below, the parties hereto agree as follows:
TERMS OF AGREEMENT
1. CONTRIBUTION OF MANAGEMENT ASSETS AND EXCHANGE FOR OP UNITS
1.1 CONTRIBUTION TRANSACTION
At the Closing (as defined in ARTICLE 2.2 herein) and subject to the
terms and conditions contained in this Contribution Agreement, the Contributor
shall transfer to the Operating Partnership, absolutely and unconditionally, all
of its Management Assets (as such term is defined in Recital D herein and as
enumerated on Exhibit A attached hereto) which consist primarily of certain
property management agreements (the "Management Agreements"), contractual rights
to purchase certain office properties (the "Contractual Rights") and certain
office-use personal property assets (the "Office Personal Property"). The
contribution of the Contributor's Management Agreements and Contractual Rights
shall be evidenced by an "ASSIGNMENT AND ASSUMPTION AGREEMENT" in substantially
the form of EXHIBIT "B" attached hereto and the contribution of the
Contributor's Office Personal Property shall be evidenced by a "XXXX OF SALE" in
substantially the form of EXHIBIT "C" attached hereto. The parties shall take
such additional actions and execute such additional documentation as may be
required by the Agreement of Limited Partnership of the Operating Partnership
(the "OP AGREEMENT") in order to effect the transactions contemplated hereby.
1.2 MINIMUM CONSIDERATION AND EXCHANGE OF OP UNITS
Subject to ARTICLES 1.3 AND 1.4 below, the Operating Partnership
shall, in exchange for the Partnership Interest, transfer to the Contributor the
number of OP Units having a value, based on one OP Unit being equal in value to
the Public Offering price for one share of the Company's common stock, equal to
the value indicated on Exhibit A as Contributor's "Total Minimum Consideration."
The transfer of the OP Units to the Contributor shall be evidenced by either an
amendment (the "AMENDMENT") to the OP Agreement or by certificates relating to
such units (the "CERTIFICATES") in either case, as shall be acceptable to the
Contributor. The parties shall take such additional actions and execute such
additional documentation as may be required by the OP Agreement in order to
effect the transaction contemplated hereby.
1.3 ADDITIONAL CONSIDERATION
Subject to ARTICLE 1.4 below, in the event that, at Closing the
aggregate value (determined as provided in ARTICLE 1.2) of the OP Units
available to all OP Participants exceeds the sum of the Total Minimum
Consideration values (after all adjustments set forth in ARTICLE 1.4) of all OP
Participants (the "ADDITIONAL CONSIDERATION"), then the Additional Consideration
or a portion thereof, if any, shall be allocated among the OP Participants
(including the Contributor) based upon the relative values of the Contributor's
Management
2
Assets and the interests contributed by each of the other OP Participants, in
each case as determined by Xxxxxxx X. Xxxxx, in his sole discretion.
1.4 ADJUSTED CONSIDERATION
The Operating Partnership reserves the right not to acquire any
particular asset that constitutes part of the Management Assets, if in good
faith the Operating Partnership determines that the ownership of such asset
would be inappropriate for the Operating Partnership for any reason whatsoever.
Contributor hereby agrees that, in such event, the Contributor's Total Minimum
Consideration may be reduced by an amount determined by Xxxxxxx X. Xxxxx, in his
sole discretion, to reflect the reduction in total value of the Management
Assets ultimately contributed by the Contributor.
1.5 AUTHORIZATION
Contributor hereby authorizes Xxxxxxx X. Xxxxx to make any and all
determinations to be made by him pursuant to ARTICLES 1.3 AND 1.4 hereof, and
any and all such determinations shall be final and binding on all parties.
1.6 CONTRIBUTION OF CERTAIN RIGHTS
Effective upon the Closing, the Contributor hereby contributes to the
Operating Partnership all of its rights and interests, if any, including rights
to indemnification in favor of the Contributor, if any, under the Management
Contracts and any agreements underlying the Contractual Rights transferred
pursuant to this Contribution Agreement.
1.7 TREATMENT AS CONTRIBUTION
The assignment and exchange of interests effectuated with respect to
the Operating Partnership, pursuant to this Contribution Agreement shall
constitute, a "Capital Contribution" pursuant to Article 4 of the OP Agreement
and is intended to be governed by Section 721(a) of the United States Internal
Revenue Code of 1986, as amended (the "CODE").
2. CLOSING
2.1 CONDITIONS PRECEDENT
The effectiveness of the Company's registration statement filed with
the Securities and Exchange Commission on Form S-11 (the "REGISTRATION
STATEMENT") is a condition precedent to the obligations of all parties to this
Contribution Agreement to effect the transactions contemplated by this
Contribution Agreement on the Closing Date (as defined below).
3
The obligations of the Operating Partnership to effect the
transactions contemplated hereby shall be subject to the following additional
conditions:
(a) The representations and warranties of the Contributor contained
in this Contribution Agreement shall have been true and correct in all material
respects on the date such representations and warranties were made, and shall be
true and correct in all material respects on the Closing Date as if made at and
as of such date;
(b) Each of the obligations of the Contributor to be performed by it
shall have been duly performed by it on or before the Closing Date;
(c) Concurrently with the Closing, the Contributor shall have
executed and delivered to the Operating Partnership the documents required to be
delivered pursuant to ARTICLE 2.3 hereof;
(d) The Contributor shall have obtained all necessary consents or
approvals of governmental authorities or third parties to the consummation of
the transactions contemplated hereby;
(e) The Contributor shall not have breached any of its covenants
contained herein in any material respect;
(f) No order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order shall have been enacted, entered, promulgated
or enforced by any court of competent jurisdiction or governmental or regulatory
authority or instrumentality that prohibits the consummation of the transactions
contemplated hereby, and no litigation or governmental proceeding seeking such
an order shall be pending or threatened; and
(g) There shall not have occurred between the date hereof and the
Closing Date any material adverse change in the Contributor's Management
Business.
The foregoing conditions may be waived by the Operating Partnership in
its sole and absolute discretion.
2.2 TIME AND PLACE
The date, time and place of the transactions contemplated hereunder
shall be the day the Operating Partnership receives the proceeds from the Public
Offering from the underwriter(s), at 10:00 a.m. in the office of Xxxxxx &
Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx (the
"CLOSING" or "CLOSING DATE"). The transfers described in ARTICLES 1.1 AND 1.2
of this Agreement, and all closing deliveries, and the consummation of the
Public Offering, shall be deemed concurrent for all purposes.
4
2.3 CLOSING DELIVERIES
At the Closing, the parties shall make, execute, acknowledge and
deliver, or cause to be delivered, the legal documents and other items
(collectively the "CLOSING DOCUMENTS") necessary to carry out the intention of
this Contribution Agreement, which Closing Documents and other items shall
include, without limitation, the following:
(i) A Contribution and Assumption Agreement for the Contributor's
Management Assets;
(ii) The Amendment or the Certificates evidencing the transfer of OP
Units to the Contributor;
(iii) The Contributor's books and records and securities or other
evidences of ownership held by the Contributor; and
(iv) An affidavit from the Contributor, stating under penalty of
perjury, the Contributor's United States Taxpayer Identification Number and
that the Contributor is not a foreign person pursuant to section 1445(b)(2)
of the Code and a comparable affidavit satisfying California requirements.
2.4 CLOSING COSTS
The Operating Partnership shall pay any documentary transfer taxes,
escrow charges, title charges and recording taxes or fees incurred in connection
with the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP
The Operating Partnership hereby represents and warrants to and
covenants with the Contributor that:
(a) ORGANIZATION; AUTHORITY. The Operating Partnership has been
duly formed and is validly existing with requisite power to enter this
Contribution Agreement and all agreements contemplated hereby. The persons
and entities executing this Contribution Agreement and all agreements
contemplated hereby on behalf of the Operating Partnership have the power
and authority to enter into this Contribution Agreement and such other
contemplated agreements; and
5
(b) DUE AUTHORIZATION. The execution, delivery and performance
by the Operating Partnership of its obligations under this Contribution
Agreement and all agreements contemplated hereby will not contravene any
provision of applicable law, the OP Agreement, charter, declaration of
trust or other constituent document of the Operating Partnership, or any
agreement or other instrument binding upon the Operating Partnership or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Operating Partnership, and no consent, approval,
authorization or order of or qualification with any governmental body or
agency is required for the performance by the Operating Partnership of its
obligations under this Contribution Agreement and all other agreements
contemplated hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR
The Contributor represents and warrants to and covenants with the
Operating Partnership as provided in EXHIBIT "D" attached hereto and
acknowledges and agrees to be bound by the indemnification provisions contained
therein.
4. COVENANTS OF CONTRIBUTOR
(a) From the date hereof through the Closing, the Contributor shall
not:
(i) Sell or transfer all or any portion of the Management
Business or Management Assets; or
(ii) Mortgage, pledge or encumber (or permit to become
encumbered) all or any portion of the Management Business or the Management
Assets.
(b) From the date hereof through the Closing, the Contributor shall
permit the Management Business to conduct its business in the ordinary course,
consistent with past practice, and shall not permit the Management Business to:
(i) Enter into any material transaction not in the ordinary
course of business;
(ii) Sell or transfer any assets of the Management Business;
(iii) Mortgage, pledge or encumber (or permit to become
encumbered) any assets of the Management Business except (x) liens for
taxes not due, (y) purchase money security interests and (z) mechanics'
liens being disputed by the Management Business in good faith and by
appropriate proceedings;
6
(iv) Amend, modify or terminate any material agreements which
constitute Management Assets as defined herein or other instruments to
which the Management Business is a party except such agreements or
instruments that may terminate pursuant to their own terms prior to Closing
independent of any amendments or modifications;
(v) Materially alter the manner of keeping the Management
Business' books, accounts or records or the accounting practices therein
reflected; or
(vi) Make any distribution to its shareholders.
(c) The Contributor shall use its good faith diligent efforts to
obtain any approvals, waivers or other consents of third parties required to
effect the transactions contemplated by this Contribution Agreement.
5. RELEASES AND WAIVERS
Each of the releases and waivers enumerated in this ARTICLE 5 shall
become effective only upon the Closing of the contribution and exchange of the
Partnership Interest pursuant to ARTICLES 1 AND 2 herein.
5.1 GENERAL RELEASE OF OPERATING PARTNERSHIP
As of the Closing, the Contributor irrevocably waives, releases and
forever discharges the Operating Partnership and the Operating Partnership's
affiliates, partners (including Xxxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxx), agents,
attorneys, successors and assigns of and from, any and all charges, complaints,
claims, liabilities, damages, actions, causes of action, losses and costs of any
nature whatsoever (collectively, "CONTRIBUTOR CLAIMS"), known or unknown,
suspected or unsuspected, arising out of or relating to this Contribution
Agreement or any other matter which exists at the Closing, except for
Contributor Claims arising from the breach of any representation, warranty,
covenant or obligation under this Contribution Agreement.
5.2 GENERAL RELEASE OF OPTIONOR
As of the Closing, the Operating Partnership irrevocably waives,
releases and forever discharges the Contributor and Contributor's agents,
attorneys, successors and assigns of and from, any and all charges, complaints,
claims, liabilities, damages, actions, causes of action, losses and costs of any
nature whatsoever (collectively, "OPERATING PARTNERSHIP CLAIMS"), known or
unknown, suspected or unsuspected, arising out of or relating to this
Contribution Agreement or any other matter which exists at the Closing, except
for Operating Partnership Claims arising from the breach of any representation,
warranty, covenant or obligation under this Contribution Agreement.
7
5.3 WAIVER OF SECTION 1542 PROTECTIONS
As of the Closing, the Contributor and the Operating Partnership each
expressly waives and relinquishes all rights and benefits afforded by Section
1542 of the California Civil Code and do so understanding and acknowledging the
significance and consequence of such specific waiver of Section 1542 which
provides:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected the settlement with the
debtor.
6. POWER OF ATTORNEY
6.1 GRANT OF POWER OF ATTORNEY
Contributor does hereby irrevocably appoint the Operating Partnership
(or its designee) and each of them individually and any successor thereof from
time to time (such Operating Partnership or designee or any such successor of
any of them acting in his, her or its capacity as attorney-in-fact pursuant
hereto, the "ATTORNEY-IN FACT") as the true and lawful attorney-in-fact and
agent of Contributor, to act in the name, place and stead of Contributor to
make, execute, acknowledge and deliver all such other contracts, orders,
receipts, notices, requests, instructions, certificates, consents, letters and
other writings (including without limitation the execution of any Closing
Documents or other documents relating to the acquisition by the Operating
Partnership of Contributor's Management Assets), to provide information to the
Securities and Exchange Commission and others about the transactions
contemplated hereby and, in general, to do all things and to take all actions
which the Attorney-in-Fact in its sole discretion may consider necessary or
proper in connection with or to carry out the transactions contemplated by this
Contribution Agreement, as fully as could Contributor if personally present and
acting.
The Power of Attorney and all authority granted hereby shall be
coupled with an interest and therefore shall be irrevocable and shall not be
terminated by any act of Contributor, by operation of law or by the occurrence
of any other event or events, and if any other such act or events shall occur
before the completion of the transactions contemplated by this Contribution
Agreement, the Attorney-in-Fact shall nevertheless be authorized and directed to
complete all such transactions as if such other act or events had not occurred
and regardless of notice thereof. Contributor agrees that, at the request of
the Operating Partnership it will promptly execute a separate power of attorney
on the same terms set forth in this ARTICLE 6, such execution to be witnessed
and notarized. Contributor hereby authorizes the reliance of third parties on
the Power of Attorney.
8
Contributor acknowledges that the Operating Partnership has, and any
designee or successor thereof acting as Attorney-in-Fact may have, an economic
interest in the transactions contemplated by this Contribution Agreement.
6.2 LIMITATION ON LIABILITY
It is understood that the Attorney-in-Fact assumes no responsibility
or liability to any person by virtue of the Power of Attorney granted by
Contributor hereby. The Attorney-in-Fact makes no representations with respect
to and shall have no responsibility for the Formation Transactions or the Public
Offering, or the acquisition of the Management Assets by the Operating
Partnership and shall not be liable for any error or judgement or for any act
done or omitted or for any mistake of fact or law except for its own gross
negligence or bad faith. Contributor agrees to indemnify the Attorney-in-Fact
for and to hold the Attorney-in-Fact harmless against any loss, claim, damage or
liability incurred on its part arising out of or in connection with it acting as
the Attorney-in-Fact under the Power of Attorney created by Contributor hereby,
as well as the cost and expense of investigating and defending against any such
loss, claim, damage or liability, except to the extend such loss, claim, damage
or liability is due to the gross negligence or bad faith of the
Attorney-in-Fact. Contributor agrees that the Attorney-in-Fact may consult with
counsel of its own choice (who may be counsel for Operating Partnership or its
successors or affiliates), and it shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel. It is understood that the
Attorney-in-Fact may, without breaching any express or implied obligation to
Contributor hereunder, release, amend or modify any other power of attorney
granted by any other person under any related agreement.
7. MISCELLANEOUS
7.1 FURTHER ASSURANCES. The Contributor shall take such other
actions and execute such additional documents following the Closing as the
Operating Partnership may reasonably request in order to effect the transactions
contemplated hereby.
7.2 COUNTERPARTS. This Contribution Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7.3 GOVERNING LAW. This Contribution Agreement shall be governed by
the internal laws of the State of California, without regard to the choice of
laws provisions thereof.
9
7.4 NOTICES. Any notice to be given hereunder by any party to the
other shall be given in writing by personal delivery or by registered or
certified mail, postage prepaid, return receipt requested, and shall be deemed
communicated as of the date of personal delivery (including delivery by
overnight courier). Mailed notices shall be addressed as set forth below, but
any party may change the address set forth below by written notice to other
parties in accordance with this paragraph.
To the Contributor:
Arden Realty Group, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000X
Xxxxxxx Xxxxx, XX 00000
To the Operating Partnership:
Arden Realty Group Limited Partnership
c/o Arden Realty Group, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000X
Xxxxxxx Xxxxx, XX 00000
IN WITNESS WHEREOF, the parties have executed this Contribution
Agreement as of the date first written above.
"OPERATING PARTNERSHIP"
ARDEN REALTY GROUP LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
general partner
By:/s/Xxxxx
--------------------------------
"CONTRIBUTOR"
ARDEN REALTY GROUP, INC.,
a California corporation
By:/s/Xxxxx
-------------------------------------
10
EXHIBIT A
to
CONTRIBUTION AGREEMENT
MANAGEMENT ASSETS TO BE CONTRIBUTED
MANAGEMENT AGREEMENTS:
1. Management Agreement dated August 6, 1991 by and between HN REALTY
ASSOCIATES, L.P. and ARDEN PACIFIC MANAGEMENT GROUP regarding the operation
and management of 0000 Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxxxx.
2. 0000 Xxxx Xxxx Xxxxxxxxx First Amendment to Property Management Agreement
dated December 30, 1993 by and between THE XXXXXX XXXXXXX AND XXXXXXXXX
XXXXXXX 1982 TRUST, as successor in interest to GRAMPIAN ASSOCIATES, and
ARDEN PACIFIC MANAGEMENT GROUP, INC. regarding the operation and management
of Century Park Center, Los Angeles, California.
3. Property Management Agreement dated November 21, 1994 by and between 222
HARBOR ASSOCIATES, LLC and ARDEN PACIFIC MANAGEMENT GROUP, INC. regarding
the operation and management of 000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx,
Xxxxxxxxxx.
4. 0000 Xxxx Xxxxxx Xxxxxx Property Management Agreement dated December 14,
1994, by and among 5000 SPRING ASSOCIATES, LLC, XXXXXX XXXXXXX as TRUSTEE
OF THE XXXXXX XXXXXXX AND XXXXXXXXX XXXXXXX 1982 TRUST, ANAHEIM PROPERTIES
COMPANY, LLC and ARDEN REALTY GROUP, INC. regarding the operations and
management of 0000 Xxxx Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxx.
5. Property Management Agreement dated December 23, 1994 by and between 222
HARBOR ASSOCIATES, LLC and ARDEN PACIFIC MANAGEMENT GROUP, INC. regarding
the operation and management of 000 Xxxx Xxxxxxxx, Xxxxxxxx, Xxxxxxxxxx.
6. Management Agreement dated March 27, 1996 by and between MED
PARTNERS/XXXXXXXX, INC. and ARDEN REALTY GROUP, INC. regarding the
management of Building "B", 0000 Xxxxxxx Xxxxx Xxxxx, Xxxx Xxxxx
Xxxxxxxxxx.
A-1
7. Management Agreement dated March 27, 1996 by and between BOARD OF DIRECTORS
OF THE AIRPORT PLAZA OWNERS ASSOCIATION and ARDEN REALTY GROUP, INC.
regarding the operations and management of the common area grounds and
parking facilities located at the Long Beach Airport Business Park, Airport
Plaza Drive, Long Beach, California.
8. Management Agreement dated April 29, 1996 by and between LONG BEACH AIRPORT
BUSINESS PARK II and ARDEN REALTY GROUP, INC. regarding the management of
Building "E", 0000 Xxxxxxx Xxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxxxxx.
CONTRACTUAL RIGHTS (TO PURCHASE THE FOLLOWING PROPERTIES):
1. 000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxx
2. 00000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxxxx
XXXXXX PERSONAL PROPERTY:
1. Office Furniture and Equipment
2. Telephone System Equipment
3. Data Processing System and Equipment
4. Deposits
TOTAL MINIMUM CONSIDERATION $13,953,535
-----------
-----------
A-2
EXHIBIT B
to
CONTRIBUTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby assigns, transfers and
conveys to ARDEN REALTY GROUP LIMITED PARTNERSHIP, a Maryland limited
partnership (the "Operating Partnership"), its entire legal and beneficial
right, title and interest in and to the Management Agreements and the
Contractual Rights (as described in Attachment "1" hereto), TO HAVE AND TO HOLD
the same unto the Operating Partnership, its successors and assigns, forever.
Upon the execution and delivery hereof, the Operating Partnership
assumes all obligations in respect of the Management Agreements and the
Contractual Rights.
Executed: __________ __, 0000 XXXXX REALTY GROUP, INC., a
California corporation
By: ____________________________________
Name: __________________________________
Title: _________________________________
B-1
EXHIBIT C
to
CONTRIBUTION AGREEMENT
XXXX OF SALE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged and acting pursuant to that certain Contribution Agreement
dated as of June 17, 1996 (the "Contribution Agreement"), by and between Arden
Realty Group, Inc., a California corporation and Arden Realty Group Limited
Partnership, a Maryland limited partnership, subject to the terms of the
Contribution Agreement, Arden Realty Group, Inc. hereby conveys, transfers,
assigns, sells and delivers to Arden Realty Group Limited Partnership all of its
right title and interest in and to the following tangible and intangible assets:
(a) the equipment and other Office Personal Property assets (as
referred to in Section 1.1 of the Contribution Agreement) set forth on Schedule
1 to this Xxxx of Sale; and
(b) the accounts receivable set forth on Schedule 2 to this Xxxx of
Sale.
Dated effective as of _______ ___, 1996.
ARDEN REALTY GROUP, INC.,
a California corporation
By:_____________________________
Its:____________________________
C-1
EXHIBIT D
to
CONTRIBUTION AGREEMENT
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
ARTICLE 1 - ADDITIONAL DEFINED TERMS
For purposes of this EXHIBIT D, the following terms have the meanings
set forth below. Terms which are not defined below shall have the meaning set
forth for those terms as defined in the Contribution Agreement to which this
EXHIBIT D is attached:
ACTIONS: Means all actions, complaints, charges, accusations,
investigations, petitions, suits or other proceedings, whether civil or
criminal, at law or in equity, or before any arbitrator or Governmental Entity.
CLAIMS: Means claims, disputes, actions, suits, arbitrations,
proceedings or investigations (collectively "Claims") pending or, to Knowledge,
threatened that directly or indirectly affect the Contributor, the Management
Business or the Management Assets.
CONTRIBUTION AGREEMENT: Means the Contribution Agreement to which
this EXHIBIT D is attached.
KNOWLEDGE: Means, with respect to any representation or warranty so
indicated, the actual knowledge, upon reasonable investigation and inquiry in
good faith, of the signatory to the Contribution Agreement.
LIENS: Means, with respect to any real and personal property, all
mortgages, pledges, liens, options, charges, security interests, restrictions,
prior assignments, encumbrances, covenants, encroachments, assessments, rights
of others, licenses, easements, liabilities or claims of any kind or nature
whatsoever, direct or indirect, including, without limitation, interests in or
claims to revenues generated by such property.
OP UNITS: Shall have the meaning set forth in the OP Agreement.
PERMITTED LIENS: Means (a) Liens, or deposits made to secure the
release of such Liens, securing taxes, the payment of which is not delinquent or
the payment of which is actively being contested in good faith by appropriate
proceedings diligently pursued; and
(b) Liens imposed by laws, such as carriers', warehousemen's and
mechanics' liens, and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings diligently
pursued.
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PERSON: Means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or governmental entity.
PROSPECTUS: Means the Company's Form S-11 Registration Statement.
REIT SHARES: Shall have the meaning set forth in the OP Agreement.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR
The Contributor represents and warrants to the Operating Partnership
as set forth below in this ARTICLE 2. Notwithstanding any other provision of
the Contribution Agreement or this EXHIBIT D, the Contributor makes
representations, warranties and indemnities only with respect to the Management
Assets to be transferred by the Contributor identified on EXHIBIT A to the
Contribution Agreement.
2.1 ORGANIZATION; AUTHORITY. The Contributor (A) if a natural
person, has the legal capacity to enter the Contribution Agreement; if not a
natural person, is duly formed, validly existing and in good standing (to the
extent applicable) under the laws of the jurisdiction of its formation, and (B)
has all requisite power and authority to own, lease or operate its property and
to carry on its business as presently conducted and, to the extent required
under applicable law, is qualified to do business and is in good standing in
each jurisdiction in which the nature of its business or the character of its
property make such qualification necessary.
2.2 DUE AUTHORIZATION. The execution, delivery and performance of
the Contribution Agreement by the Contributor has been duly and validly
authorized by all necessary action of the Contributor. The Contribution
Agreement has been duly executed and delivered by the Contributor and
constitutes a legal, valid and binding obligation of the Contributor,
enforceable against the Contributor in accordance with its terms, as such
enforceability may be limited by bankruptcy or the application of equitable
principles.
2.3 CONSENTS AND APPROVALS. No consent, waiver, approval or
authorization of any third party is required to be obtained by the Contributor
in connection with the execution, delivery and performance of the Contribution
Agreement and the transactions contemplated hereby, except any of the foregoing
that shall have been satisfied prior to the Closing Date.
2.4 OWNERSHIP OF THE MANAGEMENT ASSETS. The Contributor is the sole
owner of the Management Assets and has not pledged, assigned, hypothecated or
otherwise encumbered such Management Assets.
2.5 MANAGEMENT CONTRACTS. To the knowledge of the Contributor, a
true and correct copy of all of the contracts or other understandings, to which
the Contributor is a party or by which the Contributor is bound that relate to
its Management Business (as defined
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in Recital D), except for contracts or understandings that are not material to
the business and operations of the Management Business (collectively, the
"MANAGEMENT CONTRACTS") has been delivered to or made available to the Operating
Partnership. Each of the Management Contracts is valid and binding on the
Operating Partnership and is in full force and effect in all material respects.
To the knowledge of the Contributor, no party to the Management Contracts has
breached or defaulted under the terms of any Management Contract, except for
such breaches or defaults that would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, assets, business affairs
or business prospects of the Operating Partnership.
2.6 PERMITS. To the knowledge of the Contributor, the Contributor
has such franchises, certificates, licenses, permits and other authorizations
from government political subdivisions or regulatory authorities (collectively
"PERMITS") as are necessary for the ownership, use, operation and licensing of
the Management Business, except for any Permits for which the failure to possess
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, assets, business affairs or business prospects of
the Operating Partnership, and the Contributor is not in violation of any Permit
in any material respect.
2.7 NON-FOREIGN STATUS. The Contributor is not a foreign person,
foreign corporation, foreign partnership, foreign trust or foreign estate (as
defined in the Code), and is, therefore, not subject to the provisions of the
Code relating to the withholding of sales proceeds to foreign persons.
2.8 WITHHOLDING. The Contributor shall execute at Closing such
certificates or affidavits reasonably necessary to document the inapplicability
of any federal or state withholding provisions, including those referred to in
ARTICLE 2.7 above and similar provisions under California law. If Contributor
fails to provide such certificates or affidavits, the Operating Partnership may
withhold a portion of any payments otherwise to be made to the Contributor as
required by the Code or California law.
2.9 INVESTMENT PURPOSES. The Contributor acknowledges his, her or
its understanding that the offering and sale of the OP Units to be acquired
pursuant to the Agreement are intended to be exempt from registration under the
Securities Act of 1933, as amended and the rules and regulations in effect
thereunder (the "ACT"). In furtherance thereof, the Contributor represents and
warrants to the Company as follows:
2.9.1 INVESTMENT. The Contributor is acquiring the OP Units
solely for his, her or its own account for the purpose of investment and not as
a nominee or agent for any other person and not with a view to, or for offer or
sale in connection with, any distribution of any thereof. The Contributor
agrees and acknowledges that he, she or it will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "TRANSFER") any of the OP Units unless (i) the Transfer is
pursuant to an effective registration statement under the Act and qualification
or other compliance under applicable blue sky or state securities laws, or (ii)
counsel for the Contributor (which counsel shall be reasonably acceptable to the
Operating Partnership) shall have furnished the Operating Partnership with an
opinion,
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reasonably satisfactory in form and substance to the Operating Partnership, to
the effect that no such registration is required because of the availability of
an exemption from registration under the Act and qualification or other
compliance under applicable blue sky or state securities laws.
2.9.2 KNOWLEDGE. The Contributor is knowledgeable, sophisticated
and experienced in business and financial matters; the Contributor has
previously invested in securities similar to the OP Units and fully understands
the limitations on transfer imposed by the Federal securities laws and as
described in the Contribution Agreement. The Contributor is able to bear the
economic risk of holding the OP Units for an indefinite period and is able to
afford the complete loss of his, her or its investment in the OP Units; the
Contributor has received and reviewed all information and documents about or
pertaining to the Company, the Operating Partnership, the business and prospects
of the Company and the Operating Partnership and the issuance of the OP Units as
the Contributor deems necessary or desirable, and has been given the opportunity
to obtain any additional information or documents and to ask questions and
receive answers about such information and documents, the Company, the Operating
Partnership, the business and prospects of the Company and the Operating
Partnership and the OP Units which the Contributor deems necessary or desirable
to evaluate the merits and risks related to his, her or its investment in the OP
Units; and the Contributor understands and has taken cognizance of all risk
factors related to the purchase of the OP Units.
2.9.3 HOLDING PERIOD. The Contributor acknowledges that he, she
or it has been advised that (i) the OP Units and the common stock of the Company
into which the OP Units may be exchanged in certain circumstances (the "COMMON
STOCK") must be held indefinitely, and the Contributor must continue to bear the
economic risk of the investment in the OP Units (and any Common Stock that might
be exchanged therefor) unless they are subsequently registered under the Act or
an exemption from such registration is available, (ii) a restrictive legend in
the form hereafter set forth shall be placed on the certificates representing
the OP Units (and any Common Stock that might be exchanged therefor), and (iii)
a notation shall be made in the appropriate records of the Operating Partnership
(and the Company) indicating that the OP Units (and any Common Stock that might
be exchanged therefor) are subject to restrictions on transfer.
2.9.4 ACCREDITED INVESTOR. If the Contributor is an individual,
such individual is an "accredited investor" (as such term is defined in Rule
501(a) of Regulation D under the Act) and as such:
(i) is a director or executive officer of the Company; or
(ii) has an individual net worth, or joint net worth with his or
her spouse, in excess of $1,000,000; or
(iii)had an individual annual adjusted gross income in excess of
$200,000 in each of the two most recent years and reasonably expects to have
annual adjusted gross income in excess of $200,000 in the current year; or
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(iv) had a joint income with his spouse in excess of $300,000 in
each of the two most recent years and reasonably expects to have an annual
adjusted gross income, with his spouse, in excess of $300,000 in the current
year.
If the Contributor is not an individual, it is an "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Act).
2.9.5 LEGENDING. Each certificate representing the OP Units (and
any Common Stock that might be exchanged therefor) shall bear the following
legend:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE
PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE
SKY" LAWS;
In addition, the Common Stock for which the OP Units might be
exchanged shall also bear a legend which generally provides the following:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST
UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUBJECT
TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE
CORPORATION'S CHARTER, (1) NO PERSON MAY BENEFICIALLY OWN OR CONSTRUCTIVELY
OWN SHARES OF THE CORPORATION'S COMMON STOCK IN EXCESS OF 9.0% (BY VALUE OR
BY NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING
COMMON STOCK OF THE CORPORATION; (2) NO PERSON MAY BENEFICIALLY OR
CONSTRUCTIVELY OWN COMMON STOCK THAT WOULD RESULT IN THE CORPORATION BEING
"CLOSELY HELD" UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE
CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (3) NO PERSON MAY TRANSFER
COMMON STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE
CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO
BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR
CONSTRUCTIVELY OWN COMMON STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO
BENEFICIALLY OR CONSTRUCTIVELY OWN COMMON STOCK IN EXCESS OF THE ABOVE
D-5
LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE
RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE COMMON STOCK
REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A
TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN
ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS
SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF
DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY
VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE
OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS
DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL CAPITALIZED TERMS IN THIS
LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE
SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE
RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF
COMMON STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY
BE DIRECTED TO THE SECRETARY OF THE CORPORATION.
2.10 NO BROKERS. Neither the Contributor nor any of its respective
officers, directors or employees has incurred or will incur any liability for
any brokerage fees, commissions or finders' fees that have been paid or may
become payable by the Operating Partnership or any of its affiliates to any
broker or finder engaged by or on behalf of any of them or any of their
officers, directors or employees in connection with the transactions
contemplated by the Contribution Agreement.
2.11 COMPLIANCE WITH LAWS. The Contributor has not received any
written or other notice of any violation and, to the knowledge of the
Contributor, there are no such violations, of any applicable zoning regulation
or ordinance, or of any employment, environmental, or other regulatory law,
order, regulation, or requirement relating to the Management Business which,
individually or in the aggregate, would have a material adverse effect on the
condition, financial or otherwise, or on the earnings, assets, business affairs
or business prospects of the Operating Partnership.
2.12 INSURANCE. The Contributor currently has in place the public
liability, casualty and other insurance coverage with respect to the Management
Business as is customary for the conduct of similar businesses. To the
knowledge of the Contributor, each of the insurance policies with respect to the
Management Business is in full force and effect and all premiums due and payable
thereunder have been fully paid when due. The Contributor has not received from
any insurance company any notices of cancellation or intent to cancel any
insurance.
D-6
2.13 TAXES. The Contributor has filed all tax returns required to be
filed by it and has paid all taxes required to be paid by it. The transactions
contemplated hereby will not result in any tax liability to the Company or the
Operating Partnership. No tax lien or other charge exists or will exist upon
consummation of the transactions contemplated hereby with respect to the
Property except such tax liens for which the tax is not due and has been
reserved for payment by the Contributor or tax liens or other charges which
individually or in the aggregate would not have a material adverse effect on the
Operating Partnership.
2.14 NO VIOLATION. None of the execution, delivery or performance of
the Contribution Agreement and the transactions contemplated hereby does or
will, with or without the giving of notice, lapse of time, or both, (i) violate,
conflict with, result in a breach of, or constitute a default under or give to
others any right of termination or cancellation of (A) the organizational
documents, including the charters and bylaws, if any, of the Contributor, (B)
any material agreement, document or instrument to which the Contributor is a
party or by which the Contributor or its Management Assets are bound or (C) any
term or provision of any judgment, order, writ, injunction, or decree of any
governmental or regulatory authority binding on the Contributor or by which the
Contributor or any of its assets or properties are bound or subject or (ii)
result in the creation of any Lien, other than Permitted Liens, upon the
Management Assets.
2.15 SOLVENCY. The Contributor has been and will be solvent at all
times prior to and immediately following the transfer of the Management Assets
to the Operating Partnership.
2.16 NO MISREPRESENTATIONS. No representation, warranty or statement
made, or information provided, by the Contributor in the Contribution Agreement
or in any other document or instrument furnished or to be furnished by or on
behalf of the Contributor pursuant hereto or as contemplated hereby (i) contains
or will contain any untrue statement of a material fact or (ii) omits or will
omit to state a material fact necessary to make the statements contained herein
or therein not misleading.
ARTICLE 3 - INDEMNIFICATION
3.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; REMEDY FOR BREACH.
(a) Subject to ARTICLE 3.6, all representations and warranties
contained in this EXHIBIT D or in any Schedule or certificate delivered pursuant
hereto shall survive the Closing.
(b) Notwithstanding anything to the contrary in the Contribution
Agreement or this EXHIBIT D, no party hereto shall be liable under this EXHIBIT
D or the Contribution Agreement for monetary damages (or otherwise) for breach
of any of its representations and warranties contained in this EXHIBIT D or the
Contribution Agreement, or in any Schedule,
D-7
certificate or affidavit delivered by it pursuant thereto, other than pursuant
to the succeeding provisions of this ARTICLE 3.
3.2 GENERAL INDEMNIFICATION.
(a) The Contributor shall indemnify and hold harmless the Operating
Partnership, the REIT, and their affiliates and each of their respective
directors, officers, employees, agents, representatives and affiliates (each of
which is an "INDEMNIFIED PARTY") from and against any and all claims, losses,
damages, liabilities and expenses, including, without limitation, amounts paid
in settlement, reasonable attorneys' fees, costs of investigation and
remediation, costs of investigative, judicial or administrative proceedings or
appeals therefrom, and costs of attachment or similar bonds (collectively,
"LOSSES"), asserted against, imposed upon or incurred by the Indemnified Party
in connection with or as a result of any breach of a representation or warranty
of the Contributor contained in the Contribution Agreement or in any Schedule,
certificate or affidavit delivered by the Contributor pursuant to the
Contribution Agreement.
(b) The Contributor shall indemnify and hold harmless the Indemnified
Parties from and against any and all Losses, asserted against, imposed upon or
incurred by the Indemnified Parties in connection with or as a result of:
(i) all fees and expenses of the Contributor in connection with
the transactions contemplated by the Contribution Agreement;
(ii) any liabilities or obligations incurred, arising from or out
of, in connection with or as a result of the failure of the Contributor to
obtain all consents required to consummate the transactions contemplated by
the Contribution Agreement.
3.3 PAYMENT OF INDEMNIFICATION. The Contributor may satisfy its
obligations hereunder by the prompt delivery (paid promptly as and when expenses
are incurred) to an Indemnified Party of OP Units. Any OP Units delivered to an
Indemnified Party hereunder shall be valued based upon the initial public
offering price of the Company's Common Stock.
3.4 NOTICE AND DEFENSE OF CLAIMS. As soon as reasonably practicable
after receipt by the Indemnified Party of notice of any liability or claim
incurred by or asserted against the Indemnified Party that is subject to
indemnification under this ARTICLE 3, the Indemnified Party shall give notice
thereof to the Contributor, including liabilities or claims to be applied
against the indemnification baskets established pursuant to ARTICLE 3.5 hereof.
The Indemnified Party may at its option demand indemnity under this ARTICLE 3 as
soon as a claim has been threatened by a third party, regardless of whether an
actual Loss has been suffered, so long as the Indemnified Party shall in good
faith determine that such claim is not frivolous and that the Indemnified Party
may be liable for, or otherwise incur, a Loss as a result thereof and shall give
notice of such determination to the Contributor. The Indemnified Party shall
permit the Contributor, at its option and expense, to assume the defense of any
such claim by counsel
D-8
selected by the Contributor and reasonably satisfactory to the Indemnified
Party, and to settle or otherwise dispose of the same; PROVIDED, HOWEVER, that
the Indemnified Party may at all times participate in such defense at its
expense; and PROVIDED FURTHER, HOWEVER, that the Contributor shall not, in
defense of any such claim, except with the prior written consent of the
Indemnified Party in its sole and absolute discretion, consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff in question
to the Indemnified Party and its affiliates a release of all liabilities in
respect of such claims, or that does not result only in the payment of money
damages. If the Contributor shall fail to undertake such defense within 30 days
after such notice, or within such shorter time as may be reasonable under the
circumstances, then the Indemnified Party shall have the right to undertake the
defense, compromise or settlement of such liability or claim on behalf of and
for the account of the Contributor.
3.5 LIMITATIONS ON AND THRESHOLD FOR INDEMNIFICATION UNDER ARTICLE
3.2.
(a) The Contributor shall not be liable under ARTICLE 3.2 hereof
unless and until the total amount recoverable by the Indemnified Parties under
ARTICLES 3.2 hereof exceeds $200,000; PROVIDED, HOWEVER, that once the total
amount recoverable by the Indemnified Parties under ARTICLE 3.2 hereof exceeds
$200,000 in the aggregate, the Contributor's obligation under ARTICLE 3.2 hereof
shall be for the full amount of such obligation.
(b) Notwithstanding anything contained herein to the contrary, the
Contributor shall not be liable or obligated to make payments under this ARTICLE
3 with respect to any Management Assets to the extent such payments in the
aggregate would exceed the value of the OP Units (based upon the initial public
offering price of the Common Stock) received by the Contributor at the Closing.
Notwithstanding anything contained herein to the contrary, the Indemnified
Parties shall look first to the Contributor's OP Units for indemnification under
this ARTICLE 3 and then to the Contributor's other assets.
3.6 LIMITATION PERIOD.
(a) Notwithstanding the foregoing, any claim for indemnification
under ARTICLE 3.2 hereof must be asserted in writing by the Indemnified Party,
stating the nature of the Losses and the basis for indemnification therefor
within one year after the Closing.
(b) If so asserted in writing within one year after the Closing, such
claims for indemnification shall survive until resolved by mutual agreement
between the Contributor and the Indemnified Party or by judicial determination.
Any claim for indemnification not so asserted in writing within one year after
the Closing shall not thereafter be asserted and shall forever be waived.
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3.7 RESERVATION OF CONTRIBUTOR RIGHTS.
Notwithstanding anything else in this Contribution Agreement to the
contrary, the Contributor reserves unto itself all rights and remedies
(including rights to seek contribution) against any third party owner, occupier,
indemnitor or contributor arising from or occurring out of events relating to
any of the Management Assets prior to Closing for which the Operating
Partnership has been indemnified by the Contributor hereunder.
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