Contribution Agreement - Bbi Two Llc

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
---- 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


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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 Richard S. Ziman, 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 Richard S. Ziman, 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 Richard S. Ziman 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 Latham & Watkins, 633 West Fifth Street, Sixth Floor, Los Angeles, California (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


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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
en ...