EXHIBIT 10.17
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CONTRIBUTION AGREEMENT
by and between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
an individual
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 . . . . . . . . . . . . . . . . . . . . . 2
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
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
SECTION FIRST
EXHIBITS 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
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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual (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 "PARTNERSHIPS") which
Partnerships own 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
each such 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 Partnerships,
including, without limitation, all of its voting rights and interests in the
capital, profits and losses of the Partnerships or any property distributable
therefrom, constituting all of its interests in the Partnerships (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" for
each of the Partnerships in substantially the form of EXHIBIT "B" attached
hereto. Furthermore, the Contributor shall 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.
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
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Interest and the interests contributed by each of the other OP Participants,
in each case as determined by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 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 and after the Closing, effective
as of the Closing. After providing for such prorations, (i) if any of the
Partnerships 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 any of the Partnerships 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
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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;
(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
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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 any of the Partnerships'
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
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
(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:
(i) A Contribution and Assumption Agreement for each Partnership;
(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;
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(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 Partnerships' 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 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,
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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 (the "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; and (ii) 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:
(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 each of the Partnerships to conduct its business in the ordinary
course, consistent with past practice, and shall not permit any of the
Partnerships to:
(i) Enter into any material transaction not in the ordinary
course of business;
(ii) Sell or transfer any assets of the Partnerships;
(iii) Mortgage, pledge or encumber (or permit to become
encumbered) any assets of the Partnerships, except (x) liens for taxes not
due,
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(y) purchase money security interests and (z) mechanics' liens being
disputed by any of the Partnerships in good faith and by appropriate
proceedings;
(iv) Amend, modify or terminate any material agreements or other
instruments to which any of the Partnerships are a party;
(v) Materially alter the manner of keeping the Partnerships'
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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇),
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 any
of the Partnership Agreements, 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 any of the Partnership Agreements, 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.
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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
Agreements including, without limitation, any right to consent to or approve
of the sale or contribution by the other partners (or members) of the
Partnerships 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 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 partners of any of the Partnerships for a vote, including,
but not limited to, the transfer of interests in any of the Partnerships by
the other partners.
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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
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.
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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:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o Arden Realty Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Operating Partnership:
Arden Realty Group Limited Partnership
c/o Arden Realty Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
11
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Title: Chairman/CEO
------------------------
"CONTRIBUTOR"
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
an individual
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
12
EXHIBIT A
to
CONTRIBUTION AGREEMENT
CONSTITUENT INTERESTS OF CONTRIBUTOR'S PARTNERSHIP INTEREST
Properties Held by the Minimum
Partnerships Partnerships Consideration
-------------------- -------------------------- ---------------
1950 ▇▇▇▇▇▇▇▇ 1950 ▇▇▇▇▇▇▇▇ $ 168,403
Associates, L.P. Boulevard
-------------------- ---------------------------- ---------------
LAOP IV, LLC ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; $3,671,678
Westwood Terrace;
Calabasas Commerce Center;
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇;
▇▇ ▇▇▇▇▇ ▇▇▇▇;
Skyview Center;
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
-------------------- ---------------------------- ---------------
LAOP V, LLC ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇; $ 979,670
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
Imperial Bank Tower
-------------------- ---------------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ $4,459,544
Associates, LLC
Total Minimum
Consideration $9,279,295
---------------
---------------
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 _______________________, a
________________________ (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
By:
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
B-1
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 Partnerships or the Properties.
CONTAMINATION: Means emissions, discharges, releases or threatened
releases of "Hazardous Materials," substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of substances, pollutants,
contaminants or hazardous or toxic substances, materials, or wastes, whether
solid, liquid or gaseous in nature.
CONTRIBUTION AGREEMENT: Means the Contribution Agreement to which
this EXHIBIT D is attached.
ENVIRONMENTAL LAW: Means all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, demands, approvals,
authorizations and similar items of all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States,
states and political subdivisions thereof and all applicable judicial,
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment as in effect on the Closing
Date, including all requirements as of the Closing Date, including but not
limited to those pertaining to reporting, licensing, permitting,
investigation, removal and remediation of Contamination, including without
limitation: (x) the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 ET SEQ.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the Clean Air Act (42
U.S.C. Section 7401 ET SEQ.), the Federal Water Pollution Control Act (33
U.S.C. Section 1251), the Safe Drinking Water Act (42 U.S.C. 300f ET SEQ.),
the Toxic Substances Control Act (15 U.S.C. 2601 ET SEQ.), the Endangered
Species Act (16 U.S.C. 1531 ET SEQ.), the Emergency Planning
D-1
and Community Right-to-Know Act of 1986 (42 U.S.C: 11001 ET SEQ.), and (y)
applicable state and local statutory and regulatory schemes pertaining to
hazardous materials.
GOVERNMENTAL ENTITY: Means any government or agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state
or local, domestic or foreign.
HAZARDOUS MATERIAL: Means any substance:
(i) the presence of which requires investigation or remediation
under any Environmental Law action or policy, administrative request or
civil complaint under the foregoing or under common law; or
(ii) which is controlled, regulated or prohibited under any
Environmental Law as in effect as of the Closing Date, including the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 ET SEQ.) and the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 ET SEQ.); or
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and
as of the Closing Date is regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United
States, or any state or any political subdivision thereof having or
asserting jurisdiction over the Properties; or
(iv) the presence of which on, under or about, a Property poses a
hazard to the health or safety of persons on or about such Property; or
(v) which contains gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenyls (PCBs) or asbestos or
asbestos-containing materials or urea formaldehyde foam insulation; or
(vi) radon gas.
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.
KNOWN CONTAMINATION: Means Contamination currently existing on or
affecting the applicable Property as of the Closing, AND which such
Contamination is disclosed in
D-2
environmental reports received by the Contributor or the Partnerships on or
before the Closing (the "ENVIRONMENTAL REPORTS");
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;
(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, minor
encroachments, rights of access or other non-monetary matters that do not
have a material adverse effect upon, or materially 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.
D-3
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: (i)
the Properties identified on EXHIBIT A to the Contribution Agreement (the
"Property" or the "Properties"), and (ii) the interests in the Partnerships
to be transferred by the Contributor.
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
Partnerships. 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 relevant Partnership Agreements (as then in effect). 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
D-4
Partnerships. 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 material agreement, document or instrument to which the
Contributor is a party or by which the Contributor or its Property 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 Property or 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 Contribution 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
D-5
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
D-6
(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-7
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 COMPLIANCE WITH LAWS. In connection with the conduct of the
Properties, to Knowledge, the Partnerships have complied and on the date
hereof do substantially comply in all material respects with all applicable
laws, ordinances, rules and regulations, whether federal, state or local,
foreign, statutory or common, and neither the Partnerships nor, to Knowledge,
any third party have been informed of any material violation of any such
laws, rules or regulations, or that any investigation has been commenced or
is contemplated respecting any such possible violation.
2.11 EMINENT DOMAIN. There is no existing or, to Knowledge,
proposed or threatened condemnation, eminent domain or similar proceeding, or
private purchase in lieu of such a proceeding, which would affect the
Properties in any material respect and of which the Contributor has knowledge.
2.12 LICENSES AND PERMITS. To Knowledge, all material notices,
licenses, permits, certificates and authority required in connection with the
construction, use, occupancy, management, leasing and operation of the
Properties have been obtained, are in full force and effect, are in good
standing and (to the extent required pursuant to the transactions
contemplated hereby) are assignable to the Operating Partnership. Neither
the Partnerships, nor, to Knowledge, any third party has taken any action
that would (or failed to take any action the omission of which would) result
in the revocation of such notices, licenses, permits, certificates and
authority, that would have a material adverse effect, nor has any of them
received any written notice of violation from any Governmental Entity or
written notice of the intention of any entity to revoke any of them, that in
each case has not been cured or otherwise resolved to the satisfaction of
such Governmental Entity.
D-8
2.13 TAXES. For federal income tax purposes, the Partnerships are,
and at all times during their existence have been, partnerships (rather than
associations or publicly traded partnerships taxable as corporations). The
Partnerships have filed all tax returns required to be filed by them and have
paid all taxes required to be paid by them. The transactions contemplated
hereby will not result in any tax liability to the Partnerships, 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 Partnerships or tax liens or other charges
which individually or in the aggregate are immaterial in amount.
2.14 MECHANICS' LIENS. All material bills and claims for labor
performed and materials furnished to or for the benefit of the Properties
have been paid in full (or otherwise provided for), and there are no material
mechanics' or materialmen's liens (whether or not perfected) affecting the
Properties.
2.15 REAL PROPERTY.
(a) None of the Contributor, the Partnerships, nor, to Knowledge, any
other party to any agreement affecting any portion of the Properties, has
given or received any notice of default with respect to any material term
or condition of any agreement affecting the Properties, including, without
limitation any ground lease which would have a material adverse effect,
and, no event has occurred or, to Knowledge, is threatened, which would
have a material adverse effect and which through the passage of time or the
giving of notice, or both, would constitute a material default thereunder
or would cause the acceleration of any material obligation of any party
thereto or the creation of a Lien upon any asset of the Contributor or the
Partnerships, except for Permitted Liens. For purposes of this ARTICLE
2.15, the term "material agreement" shall be defined with reference to the
Property to which such agreement relates, and shall include, without
limitation, any agreement which is not terminable by the Company upon 90
days prior written notice. To Knowledge, such agreements are valid and
binding and in full force and effect, have not been materially amended,
modified or supplemented since such time as such agreements were made
available to the Company, except for such amendments, modifications and
supplements delivered to the Company, and there are no other material
agreements with any third parties affecting the Properties which will
survive the Closing and be binding on the Company.
(b) All permits which are necessary for the operation of the
Properties upon the consummation of the transactions contemplated hereby in
all material respects (i) shall remain in full force and effect and (ii)
permit the Properties to be operated in compliance with all laws, rules,
codes and regulations.
(c) As presently conducted, the operation of the buildings, fixtures
and other improvements located on the Properties is not in violation in any
material respect of any applicable building code, zoning ordinance or other
law or regulation, except for any
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such violations which individually or in the aggregate would not have a
material adverse effect on the Operating Partnership.
(d) Except for Known Contamination (i) to Knowledge there is
presently no noncompliance, liability or other Claim (as defined herein) in
connection with Environmental Laws relating to the Properties; (ii) no
notices of any violation or alleged violation of any Environmental Laws
relating to the Properties or their use have been received by any present
owner, or, to Knowledge, by any prior owner, operator or occupant of the
applicable Property, and (iii) there are no writs, injunctions, decrees,
orders or judgments outstanding, or any Claims pending or threatened,
relating to the ownership, use, maintenance or operation of the Properties.
Any instances of noncompliance, notices of violations, and writs,
injunctions, decrees, orders or judgments which may exist or may be
outstanding are of the type that individually or in the aggregate would not
have a material adverse effect on the Operating Partnership.
(e) All material reports of environmental surveys, audits,
investigations and assessments relating to the Properties, including, but
not limited to, the Environmental Reports in the possession or control of
the Contributor or its affiliates have been disclosed to the Operating
Partnership.
(f) Except as has been disclosed in writing to the Operating
Partnership prior to the Closing, to Knowledge and except as would not have
a material adverse effect, all material permits and licenses required under
any Environmental Laws in respect of the operation of the Properties have
been obtained or are in the process of being obtained, and the Properties
are in compliance, in all material respects, with the terms and conditions
of such permits and licenses.
2.16 TRADEMARKS AND TRADENAMES; PROPRIETARY RIGHTS.
(a) There are no actions or other judicial or administrative
proceedings involving any of the Contributor, the Partnerships, or the
Properties pending, or to Knowledge, threatened, that concern any
copyrights, copyright application, trademarks, trademark registrations,
trade names, service marks, service ▇▇▇▇ registrations, trade names and
trade name registrations or any trade secrets being transferred to the
Operating Partnership hereunder (the "PROPRIETARY RIGHTS"). There are no
patents or patent applications relating to the operations of the Properties
as conducted prior to the Closing.
(b) The Contributor has the right and authority to use each
Proprietary Right necessary in connection with the operation of the
Properties in the manner in which it is currently used, and to convey such
right and authority to the Operating Partnership at the Closing. The
current use of the Proprietary Rights does not, and to Knowledge, such use
did not, conflict with, infringe upon or violate any copyright, trade
secret, trademark or registration of any other person.
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(c) There are no outstanding or, to Knowledge, threatened disputes or
disagreements with respect to any Proprietary Right or any license,
contract, agreement or other commitment, written or oral, relating to the
same.
2.17 LITIGATION AND CLAIMS.
(a) There are no Claims which could reasonably be anticipated to
result in damages in excess of $50,000 pending or, to Knowledge, threatened
that directly or indirectly affect the Contributor, the Partnerships, the
Properties or the Formation Transactions, nor has any such claim been
pending or, to Knowledge, threatened as of the Closing.
(b) None of the Contributor, the Partnerships or the Properties are
operating under, subject to or in default with respect to any decision,
order, writ, injunction or decree of any court or federal, state or
municipal entity or other Governmental Entity.
2.18 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.
2.19 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.
2.20 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.
2.21 TITLE TO ASSETS. Upon consummation of the Formation
Transactions, the Operating Partnership's title to the Properties will be
free and clear of any Liens, encumbrances, debts, charges, liabilities or
obligations except for Permitted Liens.
2.22 PARTNERS/MEMBERS. The Contributor has made available to the
Operating Partnership a true and accurate list of all of the Partners or
members, as applicable, of the Partnerships that own, directly or indirectly,
an interest in any of the Properties, together with their percentage
interests in each Partnership.
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2.23 CONDITION OF PROPERTY. To Knowledge, and except as set forth
in the structural reports prepared for the Properties and delivered to the
Operating Partnership in connection with the Formation Transactions, there is
no material defect in the condition of any Property, the improvements
thereon, the structural elements thereof and the mechanical systems thereon,
nor any material damage from casualty or other cause, nor any soil condition
of any Property that will not support all of the improvements thereon without
the need for unusual or new subsurface excavations, fill, footings, caissons
or other installations, except for any such defect, damage or condition that
has been corrected or will be corrected in the ordinary course of the
business of the Property as part of its scheduled annual maintenance and
improvement program. To Knowledge, there have been no alterations to the
exteriors of any of the buildings or other improvements on any Property that
would render any surveys provided to the Company in connection with the
Formation Transactions grossly inaccurate or otherwise reflect a material
deficiency in title to such improvements.
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, 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 Company, 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.
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(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) any liabilities or obligations (other than the liabilities
assumed by the Indemnified Parties under the Contribution Agreement)
incurred, arising from or out of, in connection with or as a result of any
Claims made or Actions brought by or against the Operating Partnership or
any Indemnified Party that arise from or out of, in connection with or as a
result of the operation or ownership of the Properties prior to the Closing
Date, to the extent that such Losses arise from or are related to events,
conditions, actions or omissions occurring prior to the Closing Date,
exclusive of any Losses resulting directly or indirectly from
Contamination;
(ii) all fees and expenses of the Contributor in connection
with the transactions contemplated by the Contribution Agreement;
(iii) 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; or
(iv) any liabilities or obligations of the Contributor or the
Partnerships arising from or out of or in connection with or as a result of
the operation or ownership of any property or asset, other than the
Properties, including properties or assets which may have been owned and
sold by the Contributor or the Partnerships prior to the date hereof.
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 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
D-13
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 Property or 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 representations, and warranties of the Contributor set
forth in ARTICLE 2.13 hereof as specified below; and
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(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 prior to the applicable expiration
date, 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
prior to the applicable expiration date 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, prior property owners or occupants, and contributors to
any Contamination, for which the Partnerships have been indemnified by the
Contributor hereunder. To the extent the Contributor's rights against any
such third party owners, occupants, indemnitors or contributors may be
materially 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 Century
Associates, a California general partnership, and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of June 17,
1996.
(2) 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.
(3) That certain Contribution Agreement by and between ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Associates, a California general partnership, and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of June 17,
1996.
(4) That certain Contribution Agreement by and between Intercity Buildings
Associates, a California general partnership, and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of June 17,
1996.
(5) That certain Contribution Agreement by and between Montour Realty
Associates, a California general partnership, and Arden Realty Group
Limited Partnership, a Maryland limited partnership, dated as of June 17,
1996.
(6) That certain Contribution Agreement by and between Metropolitan Falls
Partners, a California general partnership, and Arden Realty Group Limited
Partnership, a Maryland limited partnership, dated as of June 17, 1996.
(7) That certain Contribution Agreement by and between ▇▇▇▇▇ Realty Partners, a
California general partnership, and Arden Realty Group Limited Partnership,
a Maryland limited partnership, dated as of June 17, 1996.
(8) That certain Contribution Agreement by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
Arden Realty Group Limited Partnership, a Maryland limited partnership,
dated as of June 17, 1996.