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CONTRIBUTION AGREEMENT
by and between
BROAD BASE INVESTMENTS TWO, LLC,
a Nevada limited liability company
and
ARDEN REALTY GROUP LIMITED PARTNERSHIP
a Maryland limited partnership
Dated as of June 17, 1996
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TABLE OF CONTENTS
PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. CONTRIBUTION OF PARTNERSHIP INTEREST 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 . . . . . . . . . . . . . . . . . . . . 3
1.4 Adjusted Consideration . . . . . . . . . . . . . . . . . . . . . 3
1.5 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Contribution of Certain Rights . . . . . . . . . . . . . . . . . 3
1.7 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Treatment as Contribution . . . . . . . . . . . . . . . . . . . . 4
2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. REPRESENTATIONS AND WARRANTIES AND INDEMNITIES . . . . . . . . . . . . 6
3.1 Representations and Warranties of the Operating Partnership . . . 6
3.2 Representations and Warranties of Contributor . . . . . . . . . . 7
3.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. COVENANTS OF CONTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . 7
5. RELEASES AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 General Release of Operating Partnership . . . . . . . . . . . . 8
5.2 General Release of Contributor . . . . . . . . . . . . . . . . . 9
5.3 Waiver of Section 1542 Protections . . . . . . . . . . . . . . . 9
5.4 Waiver of Rights Under Partnership Agreement . . . . . . . . . . 9
6. POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Grant of Power of Attorney . . . . . . . . . . . . . . . . . . . 9
6.2 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . 10
7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 11
7.2 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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EXHIBIT LIST
EXHIBITS SECTION FIRST
REFERENCED
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A Constituent Interests of Contributor's Partnership Interest . . Recital D
B Contribution and Assumption Agreement . . . . . . . . . . . . . . . . 1.1
C Form of Quitclaim . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
D Representations and Warranties of Contributor . . . . . . . . . . . . 3.2
Attachment 1 . . . . . . . . . . . . . . . List of Portfolio Agreements
ii
THIS PARTNERSHIP INTEREST 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 Broad Base
Investments Two, LLC, a Nevada limited liability company (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. The Contributor owns interests in certain of the Participating
Partnerships and LLCs as set forth on EXHIBIT "A" (the "PARTNERSHIP") which
Partnership owns directly or indirectly interests in certain of the
Participating Properties also as set forth on Exhibit A (the "PROPERTY" or
the "PROPERTIES"). As used herein, "PARTNERSHIP AGREEMENT" means the
partnership agreement or membership agreement, as applicable, under which the
Partnership was formed.
E. The Contributor desires to, and the Operating Partnership
desires the Contributor to, contribute to the Operating Partnership, all of
its right, title and interest, as a partner (or member) of the Partnership,
including, without limitation, all of its voting rights and interests in the
capital, profits and losses of the Partnership or any property distributable
therefrom, constituting all of its interests in the Partnership (such right,
title and interest are
hereinafter collectively referred to as the "PARTNERSHIP INTEREST"), 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 PARTNERSHIP INTEREST 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 Partnership Interest (as such term is defined in
Recital B herein). The contribution of the Contributor's Partnership
Interest shall be evidenced by a "CONTRIBUTION AND ASSUMPTION AGREEMENT" in
substantially the form of EXHIBIT "B" attached hereto. Furthermore, the
Contributor shall cause each of its individual constituent partners and/or
members (as applicable) to execute and have duly acknowledged an individual
quitclaim deed for each Property in the form of EXHIBIT "C" quitclaiming to
the Operating Partnership any direct or indirect ownership interest in and to
the Properties. The parties shall take such additional actions and execute
such additional documentation as may be required by the Partnership Agreement
and 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 Partnership Agreement and the OP Agreement in order to effect
the transactions contemplated hereby.
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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 Partnership Interest 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 interest that constitutes part of the Partnership Interest, if in
good faith the Operating Partnership determines that the ownership of such
interest or the underlying Property 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 Partnership Interest 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
agreements pursuant to which the Contributor or its affiliates initially
acquired the Partnership Interest transferred pursuant to this Contribution
Agreement.
1.7 PRORATIONS
At the Closing, or as promptly as practicable following the Closing,
to the extent such matters are not the right or responsibility of all tenants
of a given Property, all revenue and all charges that are customarily
prorated in transactions of this nature, including accrued rent currently due
and payable, overpaid taxes or fees, real and personal property taxes, common
area maintenance charges and other similar periodic charges payable or
receivable with respect to such Property shall be ratably prorated between
the partners of the Partnership which holds such Property prior to the
Closing and the Operating Partnership on
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and after the Closing, effective as of the Closing. After providing for such
prorations, (i) if the Partnership has a resultant cash surplus, the value of
the Contributor's Partnership Interest shall be increased in proportion to
Contributor's ratable share of such cash surplus and additional OP Units
(based on the initial Public Offering price of the Company's common stock)
shall be issued to the Contributor as a valuation adjustment to the
Contributor's Total Minimum Consideration, and (ii) if the Partnership has a
resultant cash deficit, the value of the Contributor's Partnership Interest
shall be reduced in proportion to Contributor's ratable share of such cash
deficit, and fewer OP Units shall be issued to the Contributor as a valuation
adjustment to the Contributor's Total Minimum Consideration, unless such
deficit is cured prior to Closing.
1.8 TREATMENT AS CONTRIBUTION
The transfer, 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 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).
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 SECTION 2.3 hereof;
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(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;
(g) There shall not have occurred between the date hereof and the
Closing Date any material adverse change in the Partnership's businesses;
(h) All existing management agreements with respect to the
Properties shall have been contributed to the Operating Partnership prior to
or simultaneously with the Closing; and
(i) All management functions with respect to the Properties
presently conducted by Arden Realty Group, Inc., a Maryland corporation,
shall be assumed by the Operating Partnership.
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 Contribution Agreement, and all closing deliveries, and the
consummation of the Public Offering, shall be deemed concurrent for all
purposes.
2.3 CLOSING DELIVERIES
At the Closing, the parties shall make, execute, acknowledge and
deliver, or cause to be made, executed, acknowledged and delivered through
the Attorney-in-Fact (see ARTICLE 6.1 below), 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:
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(i) A Contribution and Assumption Agreement for the Contributor's
Partnership Interest;
(ii) An individual quitclaim deed for each Property fully executed
and duly acknowledged from each of the individual constituent partners
and/or members of the Contributor, as required by the Operating
Partnership;
(iii) The Amendment or the Certificates evidencing the transfer of
OP Units to the Contributor;
(iv) American Land Title Assurances ("ALTA") policies of title
insurance with appropriate endorsements and levels of reinsurance for the
Properties issued as of the Closing Date or endorsements or other
assurances that the existing policy or policies of title insurance are
sufficient for purposes of this Contribution Agreement, which the
Contributor shall cause the title company to issue to the Operating
Partnership in a form acceptable to the Operating Partnership (the "TITLE
POLICIES") including satisfaction by the Contributor of any and all title
company requirements applicable to it;
(v) The Partnership's books and records and securities or other
evidences of ownership held by the Contributor; and
(vi) 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 and any other
withholding 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 AND INDEMNITIES
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
6
behalf of the Operating Partnership have the power and authority to enter
into this Contribution Agreement and such other contemplated agreements; and
(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.
3.3 INDEMNIFICATION
The Operating Partnership shall indemnify and hold harmless the
Contributor and its directors, officers, employees, agents, representatives and
affiliates (each of which is an "INDEMNIFIED CONTRIBUTOR 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 Contributor Party in connection with: (i) any breach
of a representation or warranty of the Operating Partnership contained in this
Contribution Agreement; (ii) any liabilities or obligations incurred, arising
from or out of, in connection with or as a result of any claims made or actions
brought by or against the Contributor, the Partnership, the Properties or an
Indemnified Contributor Party, that arise from or out of, in connection with or
as a result of any Contamination (as defined in Exhibit D hereto) of the
Properties regardless of when or how occurring, except to the extent, and only
to the extent, such Losses arise from or constitute a breach of a representation
and warranty of Contributor under Exhibit D; and (iii) all fees, costs and
expenses of the Operating Partnership in connection with the transactions
contemplated by the Contribution Agreement, including without limitation any and
all costs associated with the transfers contemplated herein.
4. COVENANTS OF CONTRIBUTOR
(a) From the date hereof through the Closing, the Contributor shall
not:
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(i) Sell or transfer all or any portion of the Partnership
Interest; or
(ii) Mortgage, pledge or encumber (or permit to become
encumbered) all or any portion of the Partnership Interest.
(b) From the date hereof through the Closing, the Contributor shall
permit the Partnership to conduct its business in the ordinary course,
consistent with past practice, and shall not permit the Partnership to:
(i) Enter into any material transaction not in the ordinary
course of business;
(ii) Sell or transfer any assets of the Partnership;
(iii) Mortgage, pledge or encumber (or permit to become
encumbered) any assets of the Partnership, except (x) liens for taxes not
due, (y) purchase money security interests and (z) mechanics' liens being
disputed by the Partnership in good faith and by appropriate proceedings;
(iv) Amend, modify or terminate any material agreements or other
instruments to which the Partnership is a party;
(v) Materially alter the manner of keeping the Partnership's
books, accounts or records or the accounting practices therein reflected;
or
(vi) Make any distribution to its partners.
(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
8
CLAIMS"), known or unknown, suspected or unsuspected, arising out of or
relating to the Partnership Agreement, 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 CONTRIBUTOR
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 the Partnership
Agreement, 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.
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.
5.4 WAIVER OF RIGHTS UNDER PARTNERSHIP AGREEMENT
As of the Closing, the Contributor waives and relinquishes all rights
and benefits otherwise afforded to Contributor under the Partnership Agreement
including, without limitation, any right to consent to or approve of the sale or
contribution by the other partners (or members) of the Partnership of their
partnership interests to the Company or the Operating Partnership.
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
9
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 Partnership
Interest), 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. Further, Contributor
hereby grants to Attorney-in-Fact a proxy (the "PROXY") to vote Contributor's
Partnership Interest on any matter related to the Formation Transactions
presented to the Partnership's partners for a vote, including, but not
limited to, the transfer of interests in the Partnership by the other
partners.
Each of the Power of Attorney and Proxy 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 Operating Partnership it will promptly execute a separate power
of attorney and proxy 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 each of the Power of Attorney and Proxy.
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 or Proxy
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 Partnership
Interest 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 or Proxy 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
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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 or proxy 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.
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:
Broad Base Investments Two, LLC
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
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
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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/ Xxxxxxx X. Xxxxx
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
"CONTRIBUTOR"
BROAD BASE INVESTMENTS TWO, LLC,
Nevada limited liability company
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
By: Xxxxxxx Foundation
/s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
President
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EXHIBIT A
to
Contribution Agreement
CONSTITUENT INTERESTS OF CONTRIBUTOR'S PARTNERSHIP INTEREST
Partnership Properties Held by the Minimum
Partnership Consideration
Arden LAOP Three, 16000 Ventura Boulevard $750,359
LLC Bristol Plaza
----------------- ----------------------- ----------------
Total Minimum
Consideration $750,359
----------------
----------------
A-1
EXHIBIT B
to
Contribution Agreement
CONTRIBUTION AND ASSUMPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby assigns, transfers,
contributes 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 ARDEN LAOP THREE, LLC, a
Nevada limited liability company (the "Partnership"), including, without
limitation, all right, title and interest, if any, of the undersigned in and
to the assets of the Partnership and the right to receive distributions of
money, profits and other assets from the Partnership, presently existing or
hereafter at any time arising or accruing (such right, title and interest are
hereinafter collectively referred to as the "Partnership Interest"), 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 Partnership Interest.
The Partnership owns certain real property as described in Attachment "1"
attached hereto.
Executed: _____ __, 1996
BROAD BASE INVESTMENTS
TWO, LLC, a Nevada limited
liability company
By:
------------------------------------
Xxxxxx Xxxxxxx
By: Xxxxxxx Foundation
------------------------------------
Xxxxxx Xxxxxxx
President
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EXHIBIT C
to
Contribution Agreement
Order No.
Escrow No.
Loan No.
WHEN RECORDED MAIL TO:
-------------------------------------------------------------------------------
MAIL TAX STATEMENTS TO: SPACE ABOVE THIS LINE FOR
RECORDER'S USE
DOCUMENTARY TRANSFER TAX $..............
...... Computed on the consideration or
value of property conveyed; OR
...... Computed on the consideration or
value less liens or encumbrances
remaining at time of sale.
----------------------------------------
Signature of Declarant of Agent
determining tax - Firm Name
-------------------------------------------------------------------------------
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
do(es) hereby REMISE, RELEASE and FOREVER QUITCLAIM to
Arden Realty Group Limited Partnership, a Maryland limited partnership
the real property in the City of ___________________, County of ______________,
State of California, described as
Dated __________________________ ______________________________________
STATE OF CALIFORNIA } ______________________________________
}
COUNTY OF ___________________________ } ______________________________________
On ________________________ before me, _______________________________________
_______________________________________,
personally appeared ___________________
_______________________________________
personally known to me (or proved to me
on the basis of satisfactory evidence)
to be the person(s) whose names(s)
is/are subscribed to the within
instrument and acknowledged to me that
he/she/they executed the same in
his/her/their authorized capacity(ies),
and that by his/her/their signature(s)
on the instrument the person(s) or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ______________________________ (This area for official notarial seal)
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 any of the
Contributor, the Partnership or the Properties.
CONTRIBUTION AGREEMENT: Means the Contribution Agreement to
which this EXHIBIT D is attached.
INDEMNIFYING PARTY: Means any party required to indemnify any
other party under ARTICLE 3.2 of this EXHIBIT D or under the indemnification
provisions substantially identical to ARTICLE 3.2 hereof in the other
Portfolio Agreements.
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.
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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;
(b) Zoning laws and ordinances generally applicable to the
districts in which the Properties are located which are not violated by the
existing structures or present uses thereof;
(c) 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;
(d) non-exclusive easements for public utilities that do not
have a material adverse effect upon, or interfere with the use of, the
Properties; and
(e) any exceptions contained in the Title Policies.
PERSON: Means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or governmental entity.
PORTFOLIO AGREEMENTS: Means the agreements, including the
Contribution Agreement, listed on ATTACHMENT "1" hereto, which contemplate
the transfer of partnership and/or limited liability company membership
interests in certain of the Participating Partnerships and LLCs from any
entity directly or indirectly owned by Contributor to the Company and the
Operating Partnership.
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
interests in the Partnership to be transferred by the Contributor identified
on EXHIBIT A to the Contribution Agreement.
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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. This
Contribution Agreement and each agreement, document and instrument executed
and delivered by or on behalf of the contributor pursuant to this
contribution Agreement constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of the Contributor, each
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 PARTNERSHIP INTERESTS. The Contributor
is the sole owner of the Partnership Interest and has good and valid title to
such Partnership Interest, free and clear of all Liens, other than Permitted
Liens.
2.5 PARTNERSHIP INTEREST. The Partnership Interest
constitutes all of the issued and outstanding interests owned by the
Contributor in the Partnership. The Partnership Interest is validly issued,
fully paid and non-assessable, and was not issued in violation of any
preemptive rights. The Partnership Interest has been issued in compliance
with applicable law and the Partnership Agreement. There are no rights,
subscriptions, warrants, options, conversion rights, preemptive rights or
agreements of any kind outstanding to purchase or to otherwise acquire any of
the interests which comprise the Partnership Interest or any securities or
obligations of any kind convertible into any of the interests which comprise
the Partnership Interest or other equity interests or profit participation of
any kind in the Partnership. At the Closing, upon receipt of the
consideration, the Contributor will have transferred the Partnership Interest
free and clear of all security interests, mortgages, pledges, liens,
encumbrances, claims and equities to the Operating Partnership.
2.6 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
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material agreement, document or instrument to which the Contributor is a
party or by which the Contributor or its Partnership Interest is 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 a Permitted Lien, upon
the Partnership Interest.
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 withhoding 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, 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
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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
(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
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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 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
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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 employed or made any
agreement with any broker, finder or similar agent or any person or firm
which will result in the obligation of the Operating Partnership or any of
its affiliates to pay any finder's fee, brokerage fees or commissions or
similar payment in connection with the transactions contemplated by the
Contribution Agreement.
2.11 SOLVENCY. The Contributor has been and will be solvent
at all times prior to and immediately following the transfer of the
Partnership Interest to the Operating Partnership.
2.12 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. For
purposes of the preceding sentence, materiality shall be determined with
reference to the total portfolio of real properties and other interests to be
transferred pursuant to the Portfolio Agreements.
2.13 TAXES. For federal income tax purposes, the Partnership
is, and at all times during its existence has been, a partnership (rather
than an association or a publicly traded partnership taxable as a
corporation). The Partnership has filed all tax returns required to be filed
by them and has paid all taxes required to be paid by them. The transactions
contemplated hereby will not result in any tax liability to the Partnership,
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 any Property except such tax liens for which the tax is not due
and has been reserved for payment by the Partnership or tax liens or other
charges which individually or in the aggregate would not have a material
adverse effect on the Operating Partnership.
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.
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(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,
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, subject to the
limits on ownership and transfer of REIT shares set forth in the Company's
articles of incorporation. 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
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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 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 aggregate amount recoverable from Indemnifying
Parties under the indemnification provisions substantially identical to
ARTICLE 3.2 in one or more of the Portfolio Agreements exceeds $200,000;
PROVIDED, HOWEVER, that once the total amount recoverable from Indemnifying
Parties under such provisions 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 Partnership Interest 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:
(i) within one year after the Closing in the case of a
claim under ARTICLE 3.2 hereof (other than a claim under
ARTICLE 3.2(a) based upon a breach of the
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representations, and warranties of the Contributor set forth in
ARTICLE 2.13 hereof as specified below; and
(ii) prior to the expiration of the applicable statutes of
limitations in the case of a claim under ARTICLE 3.2(a) based upon a
breach of the representations and warranties of the Contributor set
forth in ARTICLE 2.13 hereof.
(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.
3.7 RESERVATION OF CONTRIBUTOR RIGHTS.
Notwithstanding anything else in this Contribution Agreement
or any Portfolio Agreement to the contrary, the Contributor reserves unto
itself all rights and remedies (including rights to seek contribution)
against any third party indemnitors and prior property owners or occupants
for which the Partnership has been indemnified by the Contributor hereunder.
To the extent the Contributor's rights against any such third party
indemnitors, owners or occupants may be prejudiced by actions or inactions by
any owner or occupant of the Properties after the Closing, the Contributor's
indemnity obligation shall be reduced in accordance with the effect of the
actions or inactions which so prejudiced the Contributor's rights.
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ATTACHMENT 1 (TO EXHIBIT D)
PORTFOLIO AGREEMENTS
(1) That certain Contribution Agreement by and between Arden LAOP Two, LLC, a
Nevada limited liability company, and Arden Realty Group Limited
Partnership, a Maryland limited partnership, dated as of June 17, 1996.
(2) That certain Partnership Interest Contribution Agreement by and between
the Xxxxxx and Xxxxxxxxx Xxxxxxx 1982 Trust and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of
June 17, 1996.
(3) That certain Contribution Agreement by and between the Xxxxxx and
Xxxxxxxxx Xxxxxxx 1982 Trust and Arden Realty Group Limited Partnership,
a Maryland limited partnership, dated as of June 17, 1996.
(4) That certain Option Agreement by and between Broad Base Investments
Two, LLC, a Nevada limited liability company, and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of
June 17, 1996.
(5) That certain Contribution Agreement by and between Broad Base Investments
Two, LLC, a Nevada limited liability company, and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of
June 17, 1996.
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