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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1998.
Commission File Number: 1-12193
ARDEN REALTY, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 95-04578533
(State or other jurisdiction of incorporation or (I.R.S. Employer ID No.)
organization)
11601 WILSHIRE BOULEVARD
4TH FLOOR
LOS ANGELES, CALIFORNIA 90025-1740
(Address and zip code of principal executive offices)
(310) 966-2600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for any shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
As of December 11, 1998, there were 62,404,737 shares of the registrants Common
Stock, $.01 par value, issued and outstanding.
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The undersigned registrant hereby amends the following items of its Quarterly
Report for the third quarter of 1998 on Form 10-Q as set forth in the pages
attached hereto.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange and Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 15, 1998 ARDEN REALTY, INC.
By: /s/ DIANA M. LAING
----------------------------------------
Diana M. Laing
Executive Vice President,
Chief Financial Officer and Secretary
Date: December 15, 1998 ARDEN REALTY, INC.
By: /s/ RICHARD S. DAVIS
----------------------------------------
Richard S. Davis
Chief Accounting Officer
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(a) EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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3.1 Amended and Restated Articles of Incorporation as filed as an exhibit to
Registration Statement on Form S-11 (No.333-8163) and incorporated
herein by reference.
3.2 Articles Supplementary of the Class A Junior Participating Preferred
Stock as filed as an exhibit to the current report on Form 8-K, dated
August 26, 1998, and incorporated herein by reference.
3.3 By-laws of Registrant as filed as an exhibit to Registration Statement
on Form S-11 (No. 333-8163) and incorporated herein by reference.
3.4 Certificate of Amendment of the Bylaws of Arden Realty, Inc. dated July
14, 1998 and incorporated herein by reference.
4.1 Rights Agreement, dated as of August 14, 1998, between Arden Realty,
Inc. and the Bank of New York as filed as an exhibit to the current
report on Form 8-K, dated August 26, 1998, and incorporated herein by
reference.
10.1 Amended and Restated Agreement of Limited Partnership as filed as an
exhibit to Registration Statement on Form S-11 (No. 333-8163)and
incorporated herein by reference.
10.2 1996 Stock Option and Incentive Plan of Arden Realty, Inc. and Arden
Realty Limited Partnership as filed as an exhibit to Registration
Statement on Form S-11 (No. 333-8163) and incorporated herein by
reference.
10.3 Form of Officers and Directors Indemnification Agreement as filed as an
exhibit to Registration Statement on Form S-11 (No. 333-8163) and
incorporated herein by reference.
10.4 Warrant Agreement dated as of March 2, 1998 by and among Arden Realty,
Inc., a Maryland corporation and AEW/LBA Acquisition Co. II, LLC, a
California limited liability company as filed as an exhibit to Form 8-K
filed on March 16, 1998 and incorporated herein by reference.
10.5 Loan Agreement by and between Arden Realty Finance III, LLC, a Delaware
limited liability company and Lehman Brothers Realty Corporation, a
Delaware corporation and incorporated herein by reference.
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EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
10.6 Mortgage Note, dated June 8, 1998 for $136,100,000 by and between Arden
Realty Finance III, L.L.C., a Delaware limited liability company
("Maker"), and Lehman Brothers Realty Corporation, a Delaware
corporation. (Exhibit B. to Exhibit 10.4 above).
10.7 Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.4 above).
10.8 Subordination, Non-Disturbance and Attornment Agreement (Exhibit D. to
Exhibit 10.4 above).
10.9 Deed of Trust, Assignment of Rents and Leases, Security Agreement, and
Fixture Filing dated as of June 8, 1998 made by Arden Realty Finance
III, L.L.C. as Grantor, to Commonwealth Land Title Company as Trustee
for the benefit of Lehman Brothers Realty Corporation as Beneficiary and
incorporated herein by reference.
10.10 Assignment of Leases and Rents dated June 8, 1998, by and between Arden
Realty Finance III, L.L.C., a Delaware limited liability company
("Assignor"), and Lehman Brothers Realty Corporation, a Delaware
corporation, its successors and assigns ("Assignee") and incorporated
herein by reference.
10.11 Collateral Assignment of Management Agreement and Subordination
Agreement (the "Agreement") dated as of June 8, 1998 among Arden Realty
Finance III, L.L.C., a Delaware limited liability company ("Borrower"),
Lehman Brothers Realty Corporation, a Delaware corporation, ("Lender"),
and Arden Realty Limited Partnership, a Maryland limited partnership
("Manager") and incorporated herein by reference.
10.12 Security Agreement ("Security Agreement") is entered into as of June 8,
1998 by and between Arden Realty Finance III, L.L.C., a Delaware limited
liability company ("Debtor"), and Lehman Brothers Realty Corporation, a
Delaware corporation ("Secured Party") and incorporated herein by
reference.
10.13 Environmental Indemnity Agreement ("Agreement") dated June 8, 1998 by
Arden Realty Finance III, L.L.C., a Delaware limited liability company
("Indemnitor"), in favor of Lehman Brothers Realty Corporation, a
Delaware corporation ("Lender") and incorporated herein by reference.
10.14 Letter agreement between Lehman Brothers Realty Corporation, or an
affiliate thereof ("Lender"), Arden Realty Finance III, L.L.C.
("Borrower"), Arden Realty, Inc. (the "REIT") and Arden Realty Limited
Partnership (the "Operating Partnership") and incorporated herein by
reference.
10.15 Loan Agreement by and between Arden Realty Finance IV, LLC, a Delaware
limited liability company and Lehman Brothers Realty Corporation, a
Delaware corporation and incorporated herein by reference.
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<TABLE>
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EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
10.16 Mortgage Note, dated June 8, 1998 for $100,600,000 by and between Arden
Realty Finance IV, L.L.C., a Delaware limited liability company
("Maker"), and Lehman Brothers Realty Corporation, a Delaware
corporation (Exhibit B to Exhibit 10.14 above).
10.17 Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.14 above).
10.18 Subordination, Non-Disturbance and Attornment Agreement (Exhibit D. to
Exhibit 10.4 above).
10.19 Deed of Trust, Assignment of Rents and Leases, Security Agreement, and
Fixture Filing dated as of June 8, 1998 made by Arden Realty Finance IV,
L.L.C. as Grantor, to Commonwealth Land Title Company as Trustee for the
benefit of Lehman Brothers Realty Corporation as Beneficiary and
incorporated herein by reference.
10.20 Assignment of Leases and Rents ("Assignment") dated June 8, 1998, by and
between Arden Realty Finance IV, L.L.C., a Delaware limited liability
company ("Assignor"), and Lehman Brothers Realty Corporation, a Delaware
corporation, its successors and assigns ("Assignee") and incorporated
herein by reference.
10.21 Collateral Assignment of Management Agreement and Subordination
Agreement (the "Agreement") dated as of June 8, 1998 among Arden Realty
Finance IV, L.L.C., a Delaware limited liability company ("Borrower"),
Lehman Brothers Realty Corporation, a Delaware corporation, ("Lender"),
and Arden Realty Limited Partnership, a Maryland limited partnership
("Manager") and incorporated herein by reference.
10.22 Security Agreement ("Security Agreement") is entered into as of June 8,
1998 by and between Arden Realty Finance IV, L.L.C., a Delaware limited
liability company ("Debtor"), and Lehman Brothers Realty Corporation, a
Delaware corporation ("Secured Party") and incorporated herein by
reference.
10.23 Environmental Indemnity Agreement ("Agreement") dated June 8, 1998 by
Arden Realty Finance IV, L.L.C., a Delaware limited liability company
("Indemnitor"), in favor of Lehman Brothers Realty Corporation, a
Delaware corporation ("Lender") and incorporated herein by reference.
10.24 Letter agreement between Lehman Brothers Realty Corporation, or an
affiliate thereof ("Lender"), Arden Realty Finance IV, L.L.C.
("Borrower"), Arden Realty, Inc. (the "REIT") and Arden Realty Limited
Partnership (the "Operating Partnership") and incorporated herein by
reference.
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EXHIBIT
NUMBER DESCRIPTION
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10.25 Amended and Restated Employment Agreement dated August 4, 1998, between
Arden Realty and Mr. Richard S. Ziman.
10.26 Amended and Restated Employment Agreement dated August 4, 1998, between
Arden Realty and Mr. Victor J. Coleman.
10.27 Amended and Restated Employment Agreement dated August 4, 1998, between
Arden Realty and Ms. Diana M. Laing.
10.28 Amended and Restated Employment Agreement dated August 4, 1998, between
Arden Realty and Mr. Andrew J. Sobel.
10.29 Amended and Restated Employment Agreement dated August 4, 1998, between
Arden Realty and Mr. Herbert Porter.
10.30 Promissory Note dated August 14, 1998, between Arden Realty and Ms.
Diana M. Laing.
10.31 Promissory Note dated August 14, 1998, between Arden Realty and Mr.
Andrew J. Sobel.
10.32 Pledge Agreement dated August 14, 1998, between Arden Realty and Ms.
Diana M. Laing.
10.33 Pledge Agreement dated August 14, 1998, between Arden Realty and Mr.
Andrew J. Sobel.
10.34 Restricted Stock Agreement dated August 14, 1998, between Arden Realty
and Ms. Diana M. Laing.
10.35 Restricted Stock Agreement dated August 14, 1998, between Arden Realty
and Mr. Andrew J. Sobel.
27.1 Financial Data Schedule, as filed with Arden Realty's Quarterly Report
on Form 10-Q for the third quarter of 1998 and incorporated herein by
reference.
</TABLE>
(b) REPORTS ON FORM 8-K
A report on Form 8-K/A, dated July 28, 1998, was filed which included
information on Item 7. Item 7 contained financial statements, Pro forma
information and an exhibit. The Form 8-K/A was filed in connection with the
acquisition four commercial properties.
A report on Form 8-K dated August 26, 1998 was filed which included information
on Items 5 and 7. Item 5 contained a description of a Stockholder Rights
Agreement, which was adopted by our Board of Directors on August 14, 1998. Item
7 contained exhibits related to the Stockholder Rights Agreement.
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EXHIBIT 10.25
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of August 4,1998, by and between ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (the "Company"), ARDEN REALTY, INC.,
a Maryland corporation and the Company's general partner ("Arden" or the
"General Partner") and RICHARD S. ZIMAN ("Executive").
1. EMPLOYMENT
The Company and Arden (hereinafter referred to collectively as the
"Employers") hereby employ Executive and Executive hereby accepts employment
upon the terms and conditions set forth below.
2. TERM AND RENEWAL
2.1. Term. The term of this Agreement shall commence on October 9, 1996
(the "Effective Date"), and shall continue for three years from the Effective
Date (the "Original Employment Term"), on the terms and conditions set forth
below, unless sooner terminated as provided in Section 5.
2.2. Extension. Following the expiration of the Original Employment
Term and provided that this Agreement has not been terminated pursuant to
Section 5, and every year thereafter, the Agreement shall be automatically
renewed for an additional 12-month period, effective on each anniversary date of
the Effective Date; provided, that if a Change in Control (as defined in Section
5.6), occurs during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than twenty-four (24)
months beyond the month in which such Change in Control occurred.
3. COMPENSATION
3.1. Base Compensation. For the services to be rendered by Executive
under this Agreement, Executive shall be entitled to receive, commencing as of
the Effective Date, an initial annual base compensation ("Base Compensation") of
$330,000, payable in substantially equal semi-monthly installments. The Base
Compensation shall be reviewed and adjusted annually as determined by the
Compensation Committee (the "Compensation Committee") of the Board of Directors
(the "Board") of the General Partner.
3.2. Bonus Compensation. The Compensation Committee shall review
Executive's performance at least annually during each year of the Original
Employment Term and during any periods of automatic extension of this Agreement
pursuant to Section 2.2 and cause the Employers to award Executive a cash bonus
which the Compensation Committee shall reasonably determine as fairly
compensating and rewarding Executive for services rendered to the Employers
and/or as an incentive for continued service to the Employers. The amount of
such cash bonus shall be determined in the sole and absolute discretion of the
Compensation Committee and shall be dependent on, among other things, the
achievement of certain per share
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performance levels by the Employers, including, without limitation, growth in
funds from operations, and Executive's performance and contribution to
increasing the funds from operations.
3.3. "Gross-Up" of Compensation.
(a) Base Compensation/Base Gross-Up. The amount of the Base
Compensation and any bonus payable to Executive pursuant to Section 3.1 and 3.2
above, shall be "grossed up" as necessary (on an after-tax basis) to compensate
for any additional withholding taxes or other expenses due as a result of
Executive's employment by both the Company and Arden and the implementation of
the Compensation Split (as defined in Section 10 below) with respect to the
financial obligations of the Company and Arden, respectively.
(b) 280G "Gross-Up".
(i) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the "Excise Tax"), then
Executive shall be entitled to receive from the Company an additional payment
(the "Gross-Up Payment") in an amount such that the net amount of the Payment
and the Gross-Up Payment retained by Executive after the calculation and
deduction of all Excise Taxes (including any interest or penalties imposed with
respect to such taxes) on the Payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Section
3.3(b) and taking into account any lost or reduced tax deductions on account of
the Gross-Up Payment, shall be equal to the Payment;
(ii) All determinations required to be made under
this Section 3.3(b), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be used in
arriving at such determinations shall be made by the Accountants (as defined
below) which shall provide Executive and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15) business
days of the receipt of notice from Executive or the Company that Executive has
received or will receive a Payment. For the purposes of this Section 3.3(b), the
"Accountants" shall mean the Company's independent certified public accountants
serving immediately prior to the Change in Control (as defined in Section 5.6).
In the event that the Accountants are also serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accountants hereunder). All fees and expenses of the Accountants shall
be borne solely by the Company. For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in
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excess of the "base amount" (as defined under section 280G(b)(3) of the Code)
shall be treated as subject to the Excise Tax, unless and except to the extent
that in the opinion of the Accountants such Payments (in whole or in part)
either do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such "parachute
payments" are otherwise not subject to such Excise Tax. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
Federal income taxes at the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made and
to pay any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in such year
(determined without regard to limitations on deductions based upon the amount of
Executive's adjusted gross income), and to have otherwise allowable deductions
for federal, state and local income tax purposes at least equal to those
disallowed because of the inclusion of the Gross-Up Payment in Executive's
adjusted gross income. To the extent practicable, any Gross-Up Payment with
respect to any Payment shall be paid by the Company at the time Executive is
entitled to receive the Payment and in no event will any Gross-Up Payment be
paid later than five days after the receipt by Executive of the Accountant's
determination. Any determination by the Accountants shall be binding upon the
Company and Executive. As a result of uncertainty in the application of section
4999 of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that the Gross-Up Payment made will have been an
amount less than the Company should have paid pursuant to this Section 3.3(b)
(the "Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 3.3(b)(ii) and Executive is required to make a payment of
any Excise Tax, the Underpayment shall be promptly paid by the Company to or for
Executive's benefit; and
(iii) Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable after Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes, interest and/or penalties with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:
(A) give the Company any information
reasonably requested by the Company relating to such claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company;
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(C) cooperate with the Company in good faith
in order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 3.3(b), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify Executive for and
hold Executive harmless from, on an after-tax basis, any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance (including as a result of any forgiveness by the Company of such
advance); provided, further, that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
3.4. Benefits.
(a) Medical Insurance. The Employers shall provide to
Executive, Executive's spouse and children, at its sole cost, such health,
dental and optical insurance as the Employers may from time to time make
available to their other executive employees.
(b) Life and Disability Insurance. The Employers shall provide
Executive such disability and/or life insurance as the Employers in their sole
discretion may from time to time make available to their other executive
employees.
(c) Pension Plans, Etc. The Executive shall be entitled to
participate in all pension, 401(k) and other employee plans and benefits
established by the Employers on at least the same terms as the Employers' other
executive employees.
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3.5. Automobile Allowance. The Employers shall provide Executive with
a reasonable automobile allowance during the term of Executive's employment with
the Employers.
3.6. Method of Payment. The monetary compensation payable and any
benefits due to Executive hereunder may be paid or provided in whole or in part,
from time to time, by the Employers and/or their respective subsidiaries and
affiliates, but shall at all times remain the responsibility of the Employers.
4. POSITION AND DUTIES
4.1. Position. Executive shall serve as Chairman of the Board and Chief
Executive Officer of the Employers. The Employers agree that the duties that may
be assigned Executive shall be the usual and customary duties of the offices of
Chairman of the Board and Chief Executive Officer. Executive shall have such
executive power and authority as shall reasonably be required to enable
Executive to discharge the duties of such offices. Executive may, at Executive's
discretion, serve the Employers and/or their respective subsidiaries and
affiliates in other offices and capacities in addition to the foregoing, but
shall not be required to do so. In the event the Employers and Executive
mutually agree that Executive shall terminate Executive's service in any one or
more of the aforementioned capacities, or Executive's service in one or more of
the aforementioned capacities is terminated, Executive's compensation, as
specified in this Agreement, shall not be diminished or reduced in any manner.
4.2. Devotion of Time and Effort. Executive shall use Executive's good
faith best efforts and judgment in performing Executive's duties as required
hereunder and to act in the best interests of the Employers. Executive shall
devote such time, attention and energies to the business of the Employers as are
reasonably necessary to satisfy Executive's required responsibilities and duties
hereunder.
4.3. Other Activities. Executive may engage in other activities for
Executive's own account while employed hereunder, including without limitation
charitable, community and other business activities, provided that such other
activities do not materially interfere with the performance of Executive's
duties hereunder.
4.4. Vacation. It is understood and agreed that Executive shall be
entitled to six weeks vacation per year. During such vacation periods, Executive
shall not be relieved of Executive's duties under this Agreement and there will
be no abatement or reduction of Executive's compensation hereunder.
4.5. Business Expenses. The Employers shall promptly, but in no event
later than ten days after submission of a claim of expenditure, reimburse
Executive for all reasonable business expenses including, without limitation,
business seminar fees, professional association dues, bar dues, country club
membership fees and other reasonable entertainment expenses incurred by
Executive in connection with the business of the Employers and/or their
respective subsidiaries and affiliates, upon presentation to the Employers of
written receipts for such expenses. Such reimbursement shall also include, but
not be limited to, reimbursement for all reasonable travel
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expenses, including all airfare, hotel and rental car expenses, incurred by
Executive in traveling in connection with the business of the Employers.
4.6. Employers' Obligations. The Employers shall provide Executive with
any and all necessary or appropriate current financial information and access to
current information and records regarding all material transactions involving
the Employers and/or their representative subsidiaries and affiliates, including
but not limited to acquisition of assets, personnel contracts, dispositions of
assets, service agreements and registration statements or other state or federal
filings or disclosures, reasonably necessary for Executive to carry out
Executive's duties and responsibilities hereunder. In addition, the Employers
agree to provide Executive, as a condition to Executive's services hereunder,
such staff, equipment and office space as is reasonably necessary for Executive
to perform Executive's duties hereunder.
5. TERMINATION
5.1. By Employers Without Cause. The Employers may terminate this
Agreement without "cause" (as hereinafter defined) at any time following the
Effective Date, provided that the Employers first deliver to Executive the
Employers' written election to terminate this Agreement at least 90 days prior
to the effective date of termination.
5.2. Severance Payment.
(a) Amount. In the event the Employers terminate Executive's
services hereunder pursuant to Section 5.1, Executive shall continue to render
services to the Employers pursuant to this Agreement until the date of
termination and shall continue to receive compensation, as provided hereunder,
through the termination date. In addition to other compensation payable to
Executive for services rendered through the termination date, the Employers
shall pay Executive no later than the date of such termination, as a single
severance payment, an amount equal to the sum of: (i) three times Executive's
average annual Base Compensation paid hereunder for the preceding thirty-six
month period (or, if Executive has been employed less than thirty-six months,
the average annual Base Compensation for the period employed) plus (ii) an
amount equal to three times the highest annual bonus received by Executive
during the preceding thirty-six month period (or during the period Executive has
been employed Hereunder if shorter than thirty-six months) (collectively, the
"Severance Amount"). In addition to payment of the Severance Amount, any
unvested stock options or restricted stock held by Executive shall become fully
vested as of the date of termination.
(b) Benefits. In the event Executive's employment hereunder is
terminated by the Employers without cause pursuant to Section 5.1 or by
Executive pursuant to Section 5.4 or 5.6, then in addition to paying Executive
the Severance Amount and providing for the full vesting of unvested stock
options or restricted stock held by Executive, the Employers shall continue to
provide to Executive and Executive's spouse and children, as applicable, all of
the benefits described in Section 3.3 for a period of three years commencing on
the date of such termination (the "Severance Benefits").
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5.3. By the Employers For Cause. The Employers may terminate Executive
for cause at any time, upon written notice to Executive. For purposes of this
Agreement, "cause" shall mean:
(a) Executive's conviction for commission of a felony or a
crime involving moral turpitude;
(b) Executive's willful commission of any act of theft,
embezzlement or misappropriation against the Employers which, in any such case,
is materially and demonstrably injurious to the Employers;
(c) Executive's willful and continued failure to substantially
perform Executive's duties hereunder (other than such failure resulting from
Executive's incapacity due to physical or mental illness), which failure is not
remedied within a reasonable time after written demand for substantial
performance is delivered by the Employers which specifically identifies the
manner in which the Employers believe that Executive has not substantially
performed Executive's duties; or
(d) Executive's death or Disability (as hereinafter defined).
For purposes of this Section 5.3, no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith.
In the event Executive is terminated for cause pursuant to this Section
5.3, Executive shall have the right to receive Executive's compensation as
otherwise provided under this Agreement through the effective date of
termination. Executive shall have no further right to receive compensation or
other consideration from the Employers or have any other remedy whatsoever
against the Employers as a result of this Agreement or the termination of
Executive pursuant to this Section 5.3, except as set forth below with respect
to a termination due to Executive's Disability.
In the event Executive is terminated by reason of Executive's death or
Disability, the Employers shall immediately pay Executive the Severance Amount
and shall continue to provide to Executive's spouse and children, as applicable,
all of the benefits described in Section 3.1 for a period of three years
commencing on the date of such termination. Said payment shall be in addition to
any disability insurance payments to which Executive is otherwise entitled and
any other compensation earned by Executive hereunder. In addition, any unvested
stock options or restricted stock held by Executive shall become fully vested as
of the date of termination. For purposes of this Agreement, the term
"Disability" shall mean a physical or mental incapacity as a result of which
Executive becomes unable to continue the proper performance of Executive's
duties hereunder for six consecutive calendar months or for shorter periods
aggregating 180 business days in any 12 month period, but only to the extent
that such definition does not violate the Americans with Disabilities Act.
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5.4. By Executive For Good Reason. Executive may terminate this
Agreement for good reason upon at least 10 days prior written notice to the
Employers. For purposes of this Agreement, "good reason" shall mean:
(a) the Employers' material breach of any of their respective
obligations hereunder and either such breach is incurable or, if curable, has
not been cured within fifteen (15) days following receipt of written notice by
Executive to the Employers of such breach by either of the Employers;
(b) any removal of Executive from one or more of the offices
specified in the first sentence of Section 4.1 without cause and without
Executive's prior written consent; or
(c) any material decrease in Executive's authority or
responsibilities hereunder without Executive's prior written consent.
In the event that Executive terminates this Agreement for good reason
pursuant to this Section 5.4, Executive shall have the right to receive
Executive's compensation as provided hereunder through the effective date of
termination and shall also have the same rights and remedies against the
Employers as Executive would have had if the Employers had terminated
Executive's employment without cause pursuant to Section 5.1 (including the
right to receive the Severance Amount payable and the Severance Benefits to be
provided under Section 5.2).
5.5. Executive's Voluntary Termination. Executive may, at any time,
terminate this Agreement without good reason upon written notice delivered to
the Employers at least ninety (90) days prior to the effective date of
termination. In the event of such voluntary termination of this Agreement by
Executive: (i) Executive shall have the right to receive Executive's
compensation as provided hereunder through the effective date of termination,
and (ii) the Employers on the one hand, and Executive, on the other hand, shall
not have any further right or remedy against one another except as provided in
Sections 6, 7 and 8 hereof which shall remain in full force and effect.
5.6. Change in Control. Executive may terminate this Agreement, upon at
least ten (10) days' prior written notice to the Employers at any time within
two (2) years after a "change in control" (as hereinafter defined) of the
Employers. In the event Executive terminates this Agreement within two (2) years
after a change in control pursuant to this Section 5.6, (i) Executive shall
continue to render services pursuant hereto and shall continue to receive
compensation, as provided hereunder, through the termination date, (ii) the
Employers shall pay Executive no later than the date of such termination, as a
single severance payment, an amount equal to the Severance Amount and (iii)
following such termination, the Employers shall provide the Severance Benefits
as required by Section 5.2. For purposes of this Agreement, a "change in
control" shall mean the occurrence of any of the following events:
(a) the individuals constituting the Board as of the Effective
Date (the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3rds) of the Board; provided, however, that if the election, or
nomination for election by the General Partner's
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stockholders, of any new director was approved by a vote of at least two-thirds
(2/3rds) of the Incumbent Board, such new director shall be considered a member
of the Incumbent Board;
(b) an acquisition of any voting securities of the General
Partner (the "Voting Securities") by any "person" (as the term "person" is used
for purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the
1934 Act) ("Beneficial Ownership") of 20% or more of the combined voting power
of the General Partner's then outstanding Voting Securities; or
(c) approval by the stockholders of the General Partner of:
(i) a merger, consolidation, share exchange or
reorganization involving the General Partner, unless
(A) the stockholders of the General Partner,
immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the
outstanding voting securities of the corporation that is the
successor in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange or
reorganization; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the
Surviving Company;
(ii) a complete liquidation or dissolution of the
General Partner; or
(iii) an agreement for the sale or other disposition
of all or substantially all of the assets of the Company or the General Partner.
(d) any Person is or becomes the Beneficial Owner of
securities of the General Partner representing ten percent (10%) or more of the
combined voting power of the General Partner's then outstanding securities and
individuals constituting at least one-third (1/3) of the members of the Board at
the beginning of such period shall leave the Board during the period beginning
sixty (60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter.
6. CONFIDENTIALITY
During the term of Executive's employment under this Agreement,
Executive will have access to and become acquainted with various information
relating to the Employers' business
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operations, marketing data, business plans, strategies, employees, contracts,
financial records and accounts, projections and budgets, and similar
information. Executive agrees that to the extent such information is not
generally available to the public and gives either of the Employers an advantage
over competitors who do not know of or use such information, such information
and documents constitute "trade secrets" of the Employers. Executive further
agrees that all such information and documents relating to the business of the
Employers whether they are prepared by Executive or come into Executive's
possession in any other way, are owned by the Employers and shall remain the
exclusive property of the Employers. Executive shall not misuse, misappropriate
or disclose any trade secrets of the Employers directly or indirectly, or use
them for Executive's own benefit, either during the term of this Agreement or at
any time thereafter, except as may be necessary or appropriate in the course of
Executive's employment with the Employers unless such action is either
previously agreed to in writing by the Employers or required by law.
7. NON-SOLICITATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not solicit or induce any of the
Employers' employees, agents or independent contractors to end their
relationship with either of the Employers, or recruit, hire or otherwise induce
any such person to perform services for Executive, or any other person, firm or
company. The restrictions set forth in this Section 7 shall not apply if
Executive's employment is terminated pursuant to Section 5.1, 5.4 or 5.6.
8. NON-COMPETITION AFTER TERMINATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not engage in the acquisition,
renovation, management or leasing of any office properties in the Los Angeles,
Orange and San Diego counties of Southern California. In addition, Executive
shall not engage in any active or passive investment in or reasonably relating
to the acquisition, renovation, management or leasing of office properties in
the Los Angeles, Orange and San Diego counties of Southern California for a
period of one (1) year following the date of termination, with the exception of
the ownership of up to one percent (1%) of the securities of any publicly-traded
companies involved in such activities. Nothing herein shall relieve or limit
Executive's obligation to comply with Sections 6 and 7. The restrictions set
forth in this Section 8 shall not apply if Executive's employment is terminated
pursuant to Section 5.1, 5.4 or 5.6.
9. INDEMNIFICATION
To the fullest extent permitted under applicable law, the Employers
shall indemnify, defend and hold Executive harmless from and against any and all
causes of action, claims, demands, liabilities, damages, costs and expenses of
any nature whatsoever (collectively, "Damages") directly or indirectly arising
out of or relating to Executive discharging Executive's duties hereunder on
behalf of the Employers and/or their respective subsidiaries and affiliates, so
long as Executive acted in good faith within the course and scope of Executive's
duties with
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respect to the matter giving rise to the claim or Damages for which Executive
seeks indemnification.
10. PAYMENT OF FINANCIAL OBLIGATIONS BY EMPLOYERS
The payment or provision to the Executive by the Employers of any
remuneration, benefits or other financial obligations pursuant to this
Agreement, including, without limitation, the payment of Executive's Base
Compensation, any cash bonuses, the provision of benefits enumerated in Section
3.3, the reimbursement of business expenses pursuant to Section 4.5, the payment
(if applicable) of the Severance Amount and provision of the Severance Benefits
and any indemnification obligations, shall be allocated (the "Compensation
Split") 80% to the Company and 20% to Arden initially, subject to adjustment
from time to time by the Compensation Committee.
11. GENERAL PROVISIONS
11.1. Assignment; Binding Effect. None of the Employers or Executive
may assign, delegate or otherwise transfer this Agreement or any of their
respective rights or obligations hereunder without the prior written consent of
the other party. Any attempted prohibited assignment or delegation shall be
void. This Agreement shall be binding upon and inure to the benefit of any
permitted successors or assigns of the parties and the heirs, executors,
administrators and/or personal representatives of Executive.
11.2. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:
If to the Company Arden Realty, Inc.
or Arden: 11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attention: President
Facsimile:(310) 966-2699
If to Executive: Richard S. Ziman
c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
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Any party may change its address for the purpose of this Section 11.2
by giving the other party written notice of its new address in the manner set
forth above.
11.3. Entire Agreement. This Agreement constitutes the entire agreement
of the parties, and supersedes all prior agreements (including, without
limitation, that certain employment agreement by and between Executive, the
Company and Arden dated October 9, 1996), understandings and negotiations,
whether written or oral, between the Employers and Executive with respect to the
employment of Executive by the Employers.
11.4. Amendments; Waivers. This Agreement may be amended or modified,
and any of the terms and covenants may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by the party
waiving compliance. Any waiver by any party in any one or more instances of any
term or covenant contained in this Agreement shall neither be deemed to be nor
construed as a further or continuing waiver of any such term or covenant of this
Agreement.
11.5. Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.
11.6. Attorney's Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Agreement, each of the parties hereto shall be responsible for payment of
any attorneys' fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding.
11.7. Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
11.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
THE COMPANY:
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited
partnership
By: ARDEN REALTY, INC.,
a Maryland corporation
Its General Partner
By:_______________________________
Victor J. Coleman
President
ARDEN:
ARDEN REALTY, INC.,
a Maryland corporation
By:_______________________________
Victor J. Coleman
President
EXECUTIVE:
_________________________________
Richard S. Ziman
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EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of August 4, 1998, by and between ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (the "Company"), ARDEN REALTY, INC.,
a Maryland corporation and the Company's general partner ("Arden" or the
"General Partner") and VICTOR J. COLEMAN ("Executive").
1. EMPLOYMENT
The Company and Arden (hereinafter referred to collectively as the
"Employers") hereby employ Executive and Executive hereby accepts employment
upon the terms and conditions set forth below.
2. TERM AND RENEWAL
2.1. Term. The term of this Agreement shall commence on October 9, 1996
(the "Effective Date"), and shall continue for three years from the Effective
Date (the "Original Employment Term"), on the terms and conditions set forth
below, unless sooner terminated as provided in Section 5.
2.2. Extension. Following the expiration of the Original Employment
Term and provided that this Agreement has not been terminated pursuant to
Section 5, and every year thereafter, the Agreement shall be automatically
renewed for an additional 12-month period, effective on each anniversary date of
the Effective Date; provided, that if a Change in Control (as defined in Section
5.6), occurs during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than twenty-four (24)
months beyond the month in which such Change in Control occurred.
3. COMPENSATION
3.1. Base Compensation. For the services to be rendered by Executive
under this Agreement, Executive shall be entitled to receive, commencing as of
the Effective Date, an initial annual base compensation ("Base Compensation") of
$275,000, payable in substantially equal semi-monthly installments. The Base
Compensation shall be reviewed and adjusted annually as determined by the
Compensation Committee (the "Compensation Committee") of the Board of Directors
(the "Board") of General Partner.
3.2. Bonus Compensation. The Compensation Committee shall review
Executive's performance at least annually during each year of the Original
Employment Term and during any periods of automatic extension of this Agreement
pursuant to Section 2.2 and cause the Employers to award Executive a cash bonus
which the Compensation Committee shall reasonably determine as fairly
compensating and rewarding Executive for services rendered to the Employers
and/or as an incentive for continued service to the Employers. The amount of
such cash bonus shall be determined in the sole and absolute discretion of the
Compensation Committee and shall be dependent on, among other things, the
achievement of certain per share
<PAGE> 2
performance levels by the Employers, including, without limitation, growth in
funds from operations, and Executive's performance and contribution to
increasing the funds from operations.
3.3. "Gross-Up" of Compensation.
(a) Base Compensation/Base Gross-Up. The amount of the Base
Compensation and any bonus payable to Executive pursuant to Section 3.1 and 3.2
above, shall be "grossed up" as necessary (on an after-tax basis) to compensate
for any additional withholding taxes or other expenses due as a result of
Executive's employment by both the Company and Arden and the implementation of
the Compensation Split (as defined in Section 10 below) with respect to the
financial obligations of the Company and Arden, respectively.
(b) 280G "Gross-Up".
(i) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the "Excise Tax"), then
Executive shall be entitled to receive from the Company an additional payment
(the "Gross-Up Payment") in an amount such that the net amount of the Payment
and the Gross-Up Payment retained by Executive after the calculation and
deduction of all Excise Taxes (including any interest or penalties imposed with
respect to such taxes) on the Payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Section
3.3(b) and taking into account any lost or reduced tax deductions on account of
the Gross-Up Payment, shall be equal to the Payment;
(ii) All determinations required to be made under
this Section 3.3(b), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be used in
arriving at such determinations shall be made by the Accountants (as defined
below) which shall provide Executive and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15) business
days of the receipt of notice from Executive or the Company that Executive has
received or will receive a Payment. For the purposes of this Section 3.3(b), the
"Accountants" shall mean the Company's independent certified public accountants
serving immediately prior to the Change in Control (as defined in Section 5.6).
In the event that the Accountants are also serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accountants hereunder). All fees and expenses of the Accountants shall
be borne solely by the Company. For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in
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excess of the "base amount" (as defined under section 280G(b)(3) of the Code)
shall be treated as subject to the Excise Tax, unless and except to the extent
that in the opinion of the Accountants such Payments (in whole or in part)
either do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such "parachute
payments" are otherwise not subject to such Excise Tax. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
Federal income taxes at the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made and
to pay any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in such year
(determined without regard to limitations on deductions based upon the amount of
Executive's adjusted gross income), and to have otherwise allowable deductions
for federal, state and local income tax purposes at least equal to those
disallowed because of the inclusion of the Gross-Up Payment in Executive's
adjusted gross income. To the extent practicable, any Gross-Up Payment with
respect to any Payment shall be paid by the Company at the time Executive is
entitled to receive the Payment and in no event will any Gross-Up Payment be
paid later than five days after the receipt by Executive of the Accountant's
determination. Any determination by the Accountants shall be binding upon the
Company and Executive. As a result of uncertainty in the application of section
4999 of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that the Gross-Up Payment made will have been an
amount less than the Company should have paid pursuant to this Section 3.3(b)
(the "Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 3.3(b)(ii) and Executive is required to make a payment of
any Excise Tax, the Underpayment shall be promptly paid by the Company to or for
Executive's benefit; and
(iii) Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable after Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes, interest and/or penalties with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:
(A) give the Company any information
reasonably requested by the Company relating to such
claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation
with respect to such claim by an attorney reasonably
selected by the Company;
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(C) cooperate with the Company in good faith
in order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 3.3(b), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify Executive for and
hold Executive harmless from, on an after-tax basis, any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance (including as a result of any forgiveness by the Company of such
advance); provided, further, that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
3.4. Benefits.
(a) Medical Insurance. The Employers shall provide to
Executive, Executive's spouse and children, at its sole cost, such health,
dental and optical insurance as the Employers may from time to time make
available to their other executive employees.
(b) Life and Disability Insurance. The Employers shall provide
Executive such disability and/or life insurance as the Employers in their sole
discretion may from time to time make available to their other executive
employees.
(c) Pension Plans, Etc. The Executive shall be entitled to
participate in all pension, 401(k) and other employee plans and benefits
established by the Employers on at least the same terms as the Employers' other
executive employees.
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3.5. Automobile Allowance. The Employers shall provide Executive with a
reasonable automobile allowance during the term of Executive's employment with
the Employers.
3.6. Method of Payment. The monetary compensation payable and any
benefits due to Executive hereunder may be paid or provided in whole or in part,
from time to time, by the Employers and/or their respective subsidiaries and
affiliates, but shall at all times remain the responsibility of the Employers.
4. POSITION AND DUTIES
4.1. Position. Executive shall serve as President, Chief Operating
Officer and Director of the Employers. The Employers agree that the duties that
may be assigned Executive shall be the usual and customary duties of the offices
of President, Chief Operating Officer and Director. Executive shall have such
executive power and authority as shall reasonably be required to enable
Executive to discharge the duties of such offices. Executive may, at Executive's
discretion, serve the Employers and/or their respective subsidiaries and
affiliates in other offices and capacities in addition to the foregoing, but
shall not be required to do so. In the event the Employers and Executive
mutually agree that Executive shall terminate Executive's service in any one or
more of the aforementioned capacities, or Executive's service in one or more of
the aforementioned capacities is terminated, Executive's compensation, as
specified in this Agreement, shall not be diminished or reduced in any manner.
4.2. Devotion of Time and Effort. Executive shall use Executive's good
faith best efforts and judgment in performing Executive's duties as required
hereunder and to act in the best interests of the Employers. Executive shall
devote such time, attention and energies to the business of the Employers as are
reasonably necessary to satisfy Executive's required responsibilities and duties
hereunder.
4.3. Other Activities. Executive may engage in other activities for
Executive's own account while employed hereunder, including without limitation
charitable, community and other business activities, provided that such other
activities do not materially interfere with the performance of Executive's
duties hereunder.
4.4. Vacation. It is understood and agreed that Executive shall be
entitled to six weeks vacation per year. During such vacation periods, Executive
shall not be relieved of Executive's duties under this Agreement and there will
be no abatement or reduction of Executive's compensation hereunder.
4.5. Business Expenses. The Employers shall promptly, but in no event
later than ten days after submission of a claim of expenditure, reimburse
Executive for all reasonable business expenses including, without limitation,
business seminar fees, professional association dues, bar dues, country club
membership fees and other reasonable entertainment expenses incurred by
Executive in connection with the business of the Employers and/or their
respective subsidiaries and affiliates, upon presentation to the Employers of
written receipts for such expenses. Such reimbursement shall also include, but
not be limited to, reimbursement for all reasonable travel
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expenses, including all airfare, hotel and rental car expenses, incurred by
Executive in traveling in connection with the business of the Employers.
4.6. Employers' Obligations. The Employers shall provide Executive with
any and all necessary or appropriate current financial information and access to
current information and records regarding all material transactions involving
the Employers and/or their representative subsidiaries and affiliates, including
but not limited to acquisition of assets, personnel contracts, dispositions of
assets, service agreements and registration statements or other state or federal
filings or disclosures, reasonably necessary for Executive to carry out
Executive's duties and responsibilities hereunder. In addition, the Employers
agree to provide Executive, as a condition to Executive's services hereunder,
such staff, equipment and office space as is reasonably necessary for Executive
to perform Executive's duties hereunder.
5. TERMINATION
5.1. By Employers Without Cause. The Employers may terminate this
Agreement without "cause" (as hereinafter defined) at any time following the
Effective Date, provided that the Employers first deliver to Executive the
Employers' written election to terminate this Agreement at least 90 days prior
to the effective date of termination.
5.2. Severance Payment.
(a) Amount. In the event the Employers terminate Executive's
services hereunder pursuant to Section 5.1, Executive shall continue to render
services to the Employers pursuant to this Agreement until the date of
termination and shall continue to receive compensation, as provided hereunder,
through the termination date. In addition to other compensation payable to
Executive for services rendered through the termination date, the Employers
shall pay Executive no later than the date of such termination, as a single
severance payment, an amount equal to the sum of: (i) three times Executive's
average annual Base Compensation paid hereunder for the preceding thirty-six
month period (or, if Executive has been employed less than thirty-six months,
the average annual Base Compensation for the period employed) plus (ii) an
amount equal to three times the highest annual bonus received by Executive
during the preceding thirty-six month period (or during the period Executive has
been employed hereunder if shorter than thirty-six months) (collectively, the
"Severance Amount"). In addition to payment of the Severance Amount, any
unvested stock options or restricted stock held by Executive shall become fully
vested as of the date of termination.
(b) Benefits. In the event Executive's employment hereunder is
terminated by the Employers without cause pursuant to Section 5.1 or by
Executive pursuant to Section 5.4 or 5.6, then in addition to paying Executive
the Severance Amount and providing for the full vesting of unvested stock
options or restricted stock held by Executive, the Employers shall continue to
provide to Executive and Executive's spouse and children, as applicable, all of
the benefits described in Section 3.3 for a period of three years commencing on
the date of such termination (the "Severance Benefits").
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5.3. By The Employers For Cause. The Employers may terminate Executive
for cause at any time, upon written notice to Executive. For purposes of this
Agreement, "cause" shall mean:
(a) Executive's conviction for commission of a felony or a
crime involving moral turpitude;
(b) Executive's willful commission of any act of theft,
embezzlement or misappropriation against the Employers which, in any such case,
is materially and demonstrably injurious to the Employers;
(c) Executive's willful and continued failure to substantially
perform Executive's duties hereunder (other than such failure resulting from
Executive's incapacity due to physical or mental illness), which failure is not
remedied within a reasonable time after written demand for substantial
performance is delivered by the Employers which specifically identifies the
manner in which the Employers believe that Executive has not substantially
performed Executive's duties; or
(d) Executive's death or Disability (as hereinafter defined).
For purposes of this Section 5.3, no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith.
In the event Executive is terminated for cause pursuant to this Section
5.3, Executive shall have the right to receive Executive's compensation as
otherwise provided under this Agreement through the effective date of
termination. Executive shall have no further right to receive compensation or
other consideration from the Employers, or have any other remedy whatsoever
against the Employers, as a result of this Agreement or the termination of
Executive pursuant to this Section 5.3, except as set forth below with respect
to a termination due to Executive's Disability.
In the event Executive is terminated by reason of Executive's death or
Disability, the Employers shall immediately pay Executive the Severance Amount
and shall continue to provide to Executive's spouse and children, as applicable,
all of the benefits described in Section 3.1 for a period of three years
commencing on the date of such termination. Said payment shall be in addition to
any disability insurance payments to which Executive is otherwise entitled and
any other compensation earned by Executive hereunder. In addition, any unvested
stock options or restricted stock held by Executive shall become fully vested as
of the date of termination. For purposes of this Agreement, the term
"Disability" shall mean a physical or mental incapacity as a result of which
Executive becomes unable to continue the proper performance of Executive's
duties hereunder for six consecutive calendar months or for shorter periods
aggregating 180 business days in any 12 month period, but only to the extent
that such definition does not violate the Americans with Disabilities Act.
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5.4. By Executive For Good Reason. Executive may terminate this
Agreement for good reason upon at least 10 days prior written notice to the
Employers. For purposes of this Agreement, "good reason" shall mean:
(a) the Employers' material breach of any of their respective
obligations hereunder and either such breach is incurable or, if curable, has
not been cured within fifteen (15) days following receipt of written notice by
Executive to the Employers of such breach by either of the Employers;
(b) any removal of Executive from one or more of the offices
specified in the first sentence of Section 4.1 without cause and without
Executive's prior written consent; or
(c) any material decrease in Executive's authority or
responsibilities hereunder without Executive's prior written consent.
In the event that Executive terminates this Agreement for good reason
pursuant to this Section 5.4, Executive shall have the right to receive
Executive's compensation as provided hereunder through the effective date of
termination and shall also have the same rights and remedies against the
Employers as Executive would have had if the Employers had terminated
Executive's employment without cause pursuant to Section 5.1 (including the
right to receive the Severance Amount payable and the Severance Benefits to be
provided under Section 5.2).
5.5. Executive's Voluntary Termination. Executive may, at any time,
terminate this Agreement without good reason upon written notice delivered to
the Employers at least ninety (90) days prior to the effective date of
termination. In the event of such voluntary termination of this Agreement by
Executive: (i) Executive shall have the right to receive Executive's
compensation as provided hereunder through the effective date of termination,
and (ii) the Employers, on the one hand, and Executive, on the other hand, shall
not have any further right or remedy against one another except as provided in
Sections 6, 7 and 8 hereof which shall remain in full force and effect.
5.6. Change in Control. Executive may terminate this Agreement, upon at
least ten (10) days' prior written notice to the Employers, at any time within
two (2) years after a "change in control" (as hereinafter defined) of the
Employers. In the event Executive terminates this Agreement within two (2) years
after a change in control pursuant to this Section 5.6, (i) Executive shall
continue to render services pursuant hereto and shall continue to receive
compensation, as provided hereunder, through the termination date, (ii) the
Employers shall pay Executive no later than the date of such termination, as a
single severance payment, an amount equal to the Severance Amount and (iii)
following such termination, the Employers shall provide the Severance Benefits
as required by Section 5.2. For purposes of this Agreement, a "change in
control" shall mean the occurrence of any of the following events:
(a) the individuals constituting the Board as of the Effective
Date (the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3rds) of the Board; provided, however, that if the election, or
nomination for election by the General Partner's
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stockholders, of any new director was approved by a vote of at least two-thirds
(2/3rds) of the Incumbent Board, such new director shall be considered a member
of the Incumbent Board;
(b) an acquisition of any voting securities of the General
Partner (the "Voting Securities") by any "person" (as the term "person" is used
for purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the
1934 Act) ("Beneficial Ownership") of 20% or more of the combined voting power
of the General Partner's then outstanding Voting Securities; or
(c) approval by the stockholders of the General Partner of:
(i) a merger, consolidation, share exchange or
reorganization involving the General Partner, unless
(A) the stockholders of the General Partner,
immediately before such merger, consolidation, share exchange
or reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of
the outstanding voting securities of the corporation that is
the successor in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange
or reorganization; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the
Surviving Company;
(ii) a complete liquidation or dissolution of the
General Partner; or
(iii) an agreement for the sale or other disposition
of all or substantially all of the assets of the Company or the General Partner.
(d) any Person is or becomes the Beneficial Owner of
securities of the General Partner representing ten percent (10%) or more of the
combined voting power of the General Partner's then outstanding securities and
(A) the identity of the Chief Executive Officer of the General Partner is
changed during the period beginning sixty (60) days before the attainment of the
ten percent (10%) beneficial ownership and ending two (2) years thereafter, or
(B) individuals constituting at least one-third (1/3) of the members of the
Board at the beginning of such period shall leave the Board during the period
beginning sixty (60) days before the attainment of the ten percent (10%)
beneficial ownership and ending two (2) years thereafter.
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6. CONFIDENTIALITY
During the term of Executive's employment under this Agreement,
Executive will have access to and become acquainted with various information
relating to the Employers' business operations, marketing data, business plans,
strategies, employees, contracts, financial records and accounts, projections
and budgets, and similar information. Executive agrees that to the extent such
information is not generally available to the public and gives either of the
Employers an advantage over competitors who do not know of or use such
information, such information and documents constitute "trade secrets" of the
Employers. Executive further agrees that all such information and documents
relating to the business of the Employers, whether they are prepared by
Executive or come into Executive's possession in any other way, are owned by the
Employers and shall remain the exclusive property of the Employers. Executive
shall not misuse, misappropriate or disclose any trade secrets of the Employers,
directly or indirectly, or use them for Executive's own benefit, either during
the term of this Agreement or at any time thereafter, except as may be necessary
or appropriate in the course of Executive's employment with the Employers,
unless such action is either previously agreed to in writing by the Employers or
required by law.
7. NON-SOLICITATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not solicit or induce any of the
Employers' employees, agents or independent contractors to end their
relationship with either of the Employers, or recruit, hire or otherwise induce
any such person to perform services for Executive, or any other person, firm or
company. The restrictions set forth in this Section 7 shall not apply if
Executive's employment is terminated pursuant to Section 5.1, 5.4 or 5.6.
8. NON-COMPETITION AFTER TERMINATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not engage in the acquisition,
renovation, management or leasing of any office properties in the Los Angeles,
Orange and San Diego counties of Southern California. In addition, Executive
shall not engage in any active or passive investment in or reasonably relating
to the acquisition, renovation, management or leasing of office properties in
the Los Angeles, Orange and San Diego counties of Southern California for a
period of one (1) year following the date of termination, with the exception of
the ownership of up to one percent (1%) of the securities of any publicly-traded
companies involved in such activities. Nothing herein shall relieve or limit
Executive's obligation to comply with Sections 6 and 7. The restrictions set
forth in this Section 8 shall not apply if Executive's employment is terminated
pursuant to Section 5.1, 5.4 or 5.6.
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9. INDEMNIFICATION
To the fullest extent permitted under applicable law, the Employers
shall indemnify, defend and hold Executive harmless from and against any and all
causes of action, claims, demands, liabilities, damages, costs and expenses of
any nature whatsoever (collectively, "Damages") directly or indirectly arising
out of or relating to Executive discharging Executive's duties hereunder on
behalf of the Employers and/or their respective subsidiaries and affiliates, so
long as Executive acted in good faith within the course and scope of Executive's
duties with respect to the matter giving rise to the claim or Damages for which
Executive seeks indemnification.
10. PAYMENT OF FINANCIAL OBLIGATIONS BY EMPLOYERS
The payment or provision to the Executive by the Employers of any
remuneration, benefits or other financial obligations pursuant to this
Agreement, including, without limitation, the payment of Executive's Base
Compensation, any cash bonuses, the provision of benefits enumerated in Section
3.3, the reimbursement of business expenses pursuant to Section 4.5, the payment
(if applicable) of the Severance Amount and provision of the Severance Benefits
and any indemnification obligations, shall be allocated (the "Compensation
Split") 80% to the Company and 20% to Arden initially, subject to adjustment
from time to time by the Compensation Committee.
11. GENERAL PROVISIONS
11.1. Assignment; Binding Effect. None of the Employers or Executive
may assign, delegate or otherwise transfer this Agreement or any of their
respective rights or obligations hereunder without the prior written consent of
the other party. Any attempted prohibited assignment or delegation shall be
void. This Agreement shall be binding upon and inure to the benefit of any
permitted successors or assigns of the parties and the heirs, executors,
administrators and/or personal representatives of Executive.
11.2. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:
Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attention: President
Facsimile:(310) 966-2699
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c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
Any party may change its address for the purpose of this Section 11.2
by giving the other party written notice of its new address in the manner set
forth above.
11.3. Entire Agreement. This Agreement constitutes the entire agreement
of the parties, and supersedes all prior agreements (including, without
limitation, that certain employment agreement by and between Executive, the
Company and Arden dated October 9, 1996), understandings and negotiations,
whether written or oral, between the Employers and Executive with respect to the
employment of Executive by the Employers.
11.4. Amendments; Waivers. This Agreement may be amended or modified,
and any of the terms and covenants may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by the party
waiving compliance. Any waiver by any party in any one or more instances of any
term or covenant contained in this Agreement shall neither be deemed to be nor
construed as a further or continuing waiver of any such term or covenant of this
Agreement.
11.5. Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.
11.6. Attorney's Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Agreement, each of the parties hereto shall be responsible for payment of
any attorneys' fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding.
11.7. Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
11.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
THE COMPANY:
ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited
partnership
By: ARDEN REALTY, INC.,
a Maryland corporation
Its General Partner
By:_______________________________
Richard S. Ziman
Chief Executive Officer
ARDEN:
ARDEN REALTY, INC.,
a Maryland corporation
By:_______________________________
Richard S. Ziman
Chief Executive Officer
EXECUTIVE:
__________________________________
Victor J. Coleman
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EXHIBIT 10.27
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of August 4, 1998, by and between ARDEN REALTY, INC., a
Maryland corporation (the "Company") and DIANA M. LAING ("Executive").
1. EMPLOYMENT
The Company hereby employs Executive and Executive hereby accepts
employment upon the terms and conditions set forth below.
2. TERM AND RENEWAL
2.1. Term. The term of this Agreement shall commence on January 1, 1998
(the "Effective Date"), and shall continue for three years from the Effective
Date (the "Original Employment Term"), on the terms and conditions set forth
below, unless sooner terminated as provided in Section 5.
2.2. Extension. Following the expiration of the Original Employment
Term and provided that this Agreement has not been terminated pursuant to
Section 5, and every year thereafter, the Agreement shall be automatically
renewed for an additional 12-month period, effective on each anniversary date of
the Effective Date; provided, that if a Change in Control (as defined in Section
5.6), occurs during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than twenty-four (24)
months beyond the month in which such Change in Control occurred.
3. COMPENSATION
3.1. Base Compensation. For the services to be rendered by Executive
under this Agreement, Executive shall be entitled to receive, commencing as of
the Effective Date, an initial annual base compensation ("Base Compensation") of
$214,500 payable in substantially equal semi-monthly installments. The Base
Compensation shall be reviewed and adjusted annually as determined by the
Compensation Committee (the "Compensation Committee") of the Board of Directors
(the "Board") of the Company.
3.2. Bonus Compensation. The Compensation Committee shall review
Executive's performance at least annually during each year of the Original
Employment Term and during any periods of automatic extension of this Agreement
pursuant to Section 2.2 and cause the Company to award Executive a cash bonus
which the Compensation Committee shall reasonably determine as fairly
compensating and rewarding Executive for services rendered to the Company and/or
as an incentive for continued service to the Company. The amount of such cash
bonus shall be determined in the sole and absolute discretion of the
Compensation Committee and shall be dependent on, among other things, the
achievement of certain per share performance levels by the Company, including,
without limitation, growth in funds from operations, and Executive's performance
and contribution to increasing the funds from operations.
<PAGE> 2
3.3. "Gross-Up" of Compensation.
(a) 280G "Gross-Up".
(i) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the "Excise Tax"), then
Executive shall be entitled to receive from the Company an additional payment
(the "Gross-Up Payment") in an amount such that the net amount of the Payment
and the Gross-Up Payment retained by Executive after the calculation and
deduction of all Excise Taxes (including any interest or penalties imposed with
respect to such taxes) on the Payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Section
3.3(a) and taking into account any lost or reduced tax deductions on account of
the Gross-Up Payment, shall be equal to the Payment;
(ii) All determinations required to be made under
this Section 3.3(a), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be used in
arriving at such determinations shall be made by the Accountants (as defined
below) which shall provide Executive and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15) business
days of the receipt of notice from Executive or the Company that Executive has
received or will receive a Payment. For the purposes of this Section 3.3(a), the
"Accountants" shall mean the Company's independent certified public accountants
serving immediately prior to the Change in Control (as defined in Section 5.6).
In the event that the Accountants are also serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accountants hereunder). All fees and expenses of the Accountants shall
be borne solely by the Company. For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the opinion
of the Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-
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Up Payment, Executive shall be deemed to pay Federal income taxes at the highest
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from the deduction of
such state or local taxes if paid in such year (determined without regard to
limitations on deductions based upon the amount of Executive's adjusted gross
income), and to have otherwise allowable deductions for federal, state and local
income tax purposes at least equal to those disallowed because of the inclusion
of the Gross-Up Payment in Executive's adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be paid by
the Company at the time Executive is entitled to receive the Payment and in no
event will any Gross-Up Payment be paid later than five days after the receipt
by Executive of the Accountant's determination. Any determination by the
Accountants shall be binding upon the Company and Executive. As a result of
uncertainty in the application of section 4999 of the Code at the time of the
initial determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount less than the Company should have
paid pursuant to this Section 3.3(a) (the "Underpayment"). In the event that the
Company exhausts its remedies pursuant to Section 3.3(a)(ii) and Executive is
required to make a payment of any Excise Tax, the Underpayment shall be promptly
paid by the Company to or for Executive's benefit; and
(iii) Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable after Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes, interest and/or penalties with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:
(A) give the Company any information
reasonably requested by the Company relating to such claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith
in order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claims;
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 3.3(a), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify Executive for and
hold Executive harmless from, on an after-tax basis, any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance (including as a result of any forgiveness by the Company of such
advance); provided, further, that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
3.4. Loan. Subject to approval of the Shareholders of the Company of an
increase in the number of shares available through The 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited Partnership, in an
amount sufficient to provide Executive with shares equal in value to $1,000,000
without reducing the number of shares available through the Plan for any other
purpose, the Company shall lend to Executive $1,000,000, which Executive may use
solely for the purpose of acquiring restricted stock of the Company through The
1996 Stock Option and Incentive Plan of Arden Realty, Inc. and Arden Realty
Limited Partnership, pursuant to the terms of the note attached hereto as
Exhibit "A" (the "Loan"). The stock acquired with the proceeds of this loan
shall be pledged as security for the Loan in accordance with the terms of the
Pledge Agreement attached hereto as Exhibit "B."
3.5. Benefits.
(a) Medical Insurance. The Company shall provide to Executive,
Executive's spouse and children, at its sole cost, such health, dental and
optical insurance as the Company may from time to time make available to its
other executive employees.
(b) Life and Disability Insurance. The Company shall provide
Executive such disability and/or life insurance as the Company in its sole
discretion may from time to time make available to its other executive
employees.
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(c) Pension Plans, Etc. The Executive shall be entitled to
participate in all pension, 401(k) and other employee plans and benefits
established by the Company on at least the same terms as the Company's other
executive employees.
3.6. Automobile Allowance. The Company shall provide Executive with a
reasonable automobile allowance during the term of Executive's employment with
the Company.
3.7. Method of Payment. The monetary compensation payable and any
benefits due to Executive hereunder may be paid or provided in whole or in part,
from time to time, by the Company and/or its respective subsidiaries and
affiliates, but shall at all times remain the responsibility of the Company.
4. POSITION AND DUTIES
4.1. Position. Executive shall serve as Executive Vice President, Chief
Financial Officer and Secretary. The Company agrees that the duties that may be
assigned Executive shall be the usual and customary duties of the offices of
Chief Financial Officer. Executive shall have such Executive power and authority
as shall reasonably be required to enable Executive to discharge the duties of
such offices. Executive may, at Executive's discretion, serve the Company and/or
its respective subsidiaries and affiliates in other offices and capacities in
addition to the foregoing, but shall not be required to do so.
4.2. Devotion of Time and Effort. Executive shall use Executive's good
faith best efforts and judgment in performing Executive's duties as required
hereunder and to act in the best interests of the Company. Executive shall
devote such time, attention and energies to the business of the Company as are
reasonably necessary to satisfy Executive's required responsibilities and duties
hereunder.
4.3. Other Activities. Executive may engage in other activities for
Executive's own account while employed hereunder, including without limitation
charitable, community and other business activities, provided that such other
activities do not materially interfere with the performance of Executive's
duties hereunder.
4.4. Vacation. It is understood and agreed that Executive shall be
entitled to three (3) weeks vacation per year. During such vacation periods,
Executive shall not be relieved of Executive's duties under this Agreement and
there will be no abatement or reduction of Executive's compensation hereunder.
4.5. Business Expenses. The Company shall promptly, but in no event
later than ten days after submission of a claim of expenditure, reimburse
Executive for all reasonable business expenses including, without limitation,
business seminar fees, professional association dues, bar dues, country club
membership fees and other reasonable entertainment expenses incurred by
Executive in connection with the business of the Company and/or its respective
subsidiaries and affiliates, upon presentation to the Company of written
receipts for such expenses. Such reimbursement shall also include, but not be
limited to, reimbursement for all reasonable travel expenses,
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including all airfare, hotel and rental car expenses, incurred by Executive in
traveling in connection with the business of the Company.
4.6. Company's Obligations. The Company shall provide Executive with
any and all necessary or appropriate current financial information and access to
current information and records regarding all material transactions involving
the Company and/or its representative subsidiaries and affiliates, including but
not limited to acquisition of assets, personnel contracts, dispositions of
assets, service agreements and registration statements or other state or federal
filings or disclosures, reasonably necessary for Executive to carry out
Executive's duties and responsibilities hereunder. In addition, the Company
agrees to provide Executive, as a condition to Executive's services hereunder,
such staff, equipment and office space as is reasonably necessary for Executive
to perform Executive's duties hereunder.
5. TERMINATION
5.1. By the Company Without Cause. The Company may terminate this
Agreement without "cause" (as hereinafter defined) at any time following the
Effective Date, provided that the Company first delivers to Executive the
Company's written election to terminate this Agreement at least 90 days prior to
the effective date of termination.
5.2. Severance Payment.
(a) Amount. In the event the Company terminates Executive's
services hereunder pursuant to Section 5.1, Executive shall continue to render
services to the Company pursuant to this Agreement until the date of termination
and shall continue to receive compensation, as provided hereunder, through the
termination date. In addition to other compensation payable to Executive for
services rendered through the termination date, the Company shall pay Executive
no later than the date of such termination, as a single severance payment, an
amount equal to the sum of: (i) three times Executive's average annual Base
Compensation paid hereunder for the preceding thirty-six month period (or, if
Executive has been employed less than thirty-six months, the average annual Base
Compensation for the period employed) plus (ii) an amount equal to three times
the highest annual bonus received by Executive during the preceding thirty-six
month period (or during the period Executive has been employed hereunder if
shorter than thirty-six months) (collectively, the "Severance Amount"). In
addition to payment of the Severance Amount, any unvested stock options or
restricted stock held by Executive shall become fully vested as of the date of
termination.
(b) Benefits. In the event Executive's employment hereunder is
terminated by the Company without cause pursuant to Section 5.1 or by Executive
pursuant to Section 5.4 or 5.6, then in addition to paying Executive the
Severance Amount and providing for the full vesting of unvested stock options or
restricted stock held by Executive, the Company shall continue to provide to
Executive and Executive's spouse and children, as applicable, all of the
benefits described in Section 3.1 for a period of three years commencing on the
date of such termination (the "Severance Benefits").
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5.3. By The Company For Cause. The Company may terminate Executive for
cause at any time, upon written notice to Executive. For purposes of this
Agreement, "cause" shall mean:
(a) Executive's conviction for commission of a felony or a
crime involving moral turpitude;
(b) Executive's willful commission of any act of theft,
embezzlement or misappropriation against the Company which, in any such case, is
materially and demonstrably injurious to the Company;
(c) Executive's willful and continued failure to substantially
perform Executive's duties hereunder (other than such failure resulting from
Executive's incapacity due to physical or mental illness), which failure is not
remedied within a reasonable time after written demand for substantial
performance is delivered by the Company which specifically identifies the manner
in which the Company believes that Executive has not substantially performed
Executive's duties; or
(d) Executive's death or Disability (as hereinafter defined).
For purposes of this Section 5.3, no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith.
In the event Executive is terminated for cause pursuant to this Section
5.3, Executive shall have the right to receive Executive's compensation as
otherwise provided under this Agreement through the effective date of
termination. Executive shall have no further right to receive compensation or
other consideration from the Company, or have any other remedy whatsoever
against the Company, as a result of this Agreement or the termination of
Executive pursuant to this Section 5.3, except as set forth below with respect
to a termination due to Executive's Disability.
In the event Executive is terminated by reason of Executive's death or
Disability, the Company shall immediately pay Executive a the Severance Amount
and shall continue to provide to Executive's spouse and children, as applicable,
all of the benefits described in Section 3.3 for a period of three years
commencing on the date of such termination. Said payments shall be in addition
to any disability insurance payments to which Executive is otherwise entitled
and any other compensation earned by Executive hereunder. In addition, any
unvested stock options or restricted stock held by Executive shall become fully
vested as of the date of termination. For purposes of this Agreement, the term
"Disability" shall mean a physical or mental incapacity as a result of which
Executive becomes unable to continue the proper performance of Executive's
duties hereunder for six consecutive calendar months or for shorter periods
aggregating 180 business days in any 12 month period, but only to the extent
that such definition does not violate the Americans with Disabilities Act.
5.4. By Executive For Good Reason. Executive may terminate this
Agreement for good reason upon at least 10 days prior written notice to the
Company. For purposes of this Agreement, "good reason" shall mean:
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(a) the Company's material breach of any of its respective
obligations hereunder and either such breach is incurable or, if curable, has
not been cured within fifteen (15) days following receipt of written notice by
Executive to the Company of such breach by the Company;
(b) any removal of Executive from one or more of the offices
specified in the first sentence of Section 4.1 without cause and without
Executive's prior written consent; or
(c) any material decrease in Executive's authority or
responsibilities hereunder without Executive's prior written consent.
In the event that Executive terminates this Agreement for good reason
pursuant to this Section 5.4, Executive shall have the right to receive
Executive's compensation as provided hereunder through the effective date of
termination and shall also have the same rights and remedies against the Company
as Executive would have had if the Company had terminated Executive's employment
without cause pursuant to Section 5.1 (including the right to receive the
Severance Amount payable and the Severance Benefits to be provided under Section
5.2).
5.5. Executive's Voluntary Termination. Executive may, at any time,
terminate this Agreement without good reason upon written notice delivered to
the Company at least ninety (90) days prior to the effective date of
termination. In the event of such voluntary termination of this Agreement by
Executive: (i) Executive shall have the right to receive Executive's
compensation as provided hereunder through the effective date of termination,
and (ii) the Company, on the one hand, and Executive, on the other hand, shall
not have any further right or remedy against one another except as provided in
Sections 6, 7 and 8 hereof which shall remain in full force and effect.
5.6. Change in Control. Executive may terminate this Agreement, upon at
least ten (10) days' prior written notice to the Company, at any time within two
(2) years after a "change in control" (as hereinafter defined) of the Company.
In the event Executive terminates this Agreement within two (2) years after a
change in control pursuant to this Section 5.6, (i) Executive shall continue to
render services pursuant hereto and shall continue to receive compensation, as
provided hereunder, through the termination date, (ii) the Company shall pay
Executive no later than the date of such termination, as a single severance
payment, an amount equal to the Severance Amount, (iii) following such
termination, the Company shall provide the Severance Benefits as required by
Section 5.2 and (iv) any outstanding balance on the Loan shall be forgiven in
its entirety . For purposes of this Agreement, a "change in control" shall mean
the occurrence of any of the following events:
(a) the individuals constituting the Board as of the Effective
Date (the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3rds) of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any new director was
approved by a vote of at least two-thirds (2/3rds) of the Incumbent Board, such
new director shall be considered a member of the Incumbent Board;
(b) an acquisition of any voting securities of the Company
(the "Voting Securities") by any "person" (as the term "person" is used for
purposes of Section 13(d) or
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Section 14(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act")) immediately after which such person has "beneficial ownership" (within
the meaning of Rule 13d-3 promulgated under the 1934 Act) ("Beneficial
Ownership") of 20% or more of the combined voting power of the Company's then
outstanding Voting Securities; or
(c) approval by the stockholders of the Company of:
(i) a merger, consolidation, share exchange or
reorganization involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation, share exchange
or reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of
the outstanding voting securities of the corporation that is
the successor in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange
or reorganization; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the
Surviving Company;
(ii) a complete liquidation or dissolution of the
Company; or
(iii) an agreement for the sale or other disposition
of all or substantially all of the assets of the Company.
(d) any Person is or becomes the Beneficial Owner of
securities of the Company representing ten percent (10%) or more of the combined
voting power of the Company's then outstanding securities and (A) the identity
of the Chief Executive Officer of the Company is changed during the period
beginning sixty (60) days before the attainment of the ten percent (10%)
beneficial ownership and ending two (2) years thereafter, or (B) individuals
constituting at least one-third (1/3) of the members of the Board at the
beginning of such period shall leave the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial ownership
and ending two (2) years thereafter.
6. CONFIDENTIALITY
During the term of Executive's employment under this Agreement,
Executive will have access to and become acquainted with various information
relating to the Company's business operations, marketing data, business plans,
strategies, employees, contracts, financial records and accounts, projections
and budgets, and similar information. Executive agrees that to the extent such
information is not generally available to the public and gives the Company an
advantage over
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competitors who do not know of or use such information, such information and
documents constitute "trade secrets" of the Company. Executive further agrees
that all such information and documents relating to the business of the Company,
whether they are prepared by Executive or come into Executive's possession in
any other way, are owned by the Company and shall remain the exclusive property
of the Company. Executive shall not misuse, misappropriate or disclose any trade
secrets of the Company, directly or indirectly, or use them for Executive's own
benefit, either during the term of this Agreement or at any time thereafter,
except as may be necessary or appropriate in the course of Executive's
employment with the Company, unless such action is either previously agreed to
in writing by the Company or required by law.
7. NON-SOLICITATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not solicit or induce any of the
Company's employees, agents or independent contractors to end their relationship
with the Company, or recruit, hire or otherwise induce any such person to
perform services for Executive, or any other person, firm or company. The
restrictions set forth in this Section 7 shall not apply if Executive's
employment is terminated pursuant to Section 5.1, 5.4 or 5.6.
8. NON-COMPETITION AFTER TERMINATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not engage in the acquisition,
renovation, management or leasing of any office properties in the Los Angeles,
Orange and San Diego counties of Southern California. In addition, Executive
shall not engage in any active or passive investment in or reasonably relating
to the acquisition, renovation, management or leasing of office properties in
the Los Angeles, Orange and San Diego counties of Southern California for a
period of one (1) year following the date of termination, with the exception of
the ownership of up to one percent (1%) of the securities of any publicly-traded
companies involved in such activities. Nothing herein shall relieve or limit
Executive's obligation to comply with Sections 6 and 7. The restrictions set
forth in this Section 8 shall not apply if Executive's employment is terminated
pursuant to Section 5.1, 5.4 or 5.6.
9. INDEMNIFICATION
To the fullest extent permitted under applicable law, the Company shall
indemnify, defend and hold Executive harmless from and against any and all
causes of action, claims, demands, liabilities, damages, costs and expenses of
any nature whatsoever (collectively, "Damages") directly or indirectly arising
out of or relating to Executive discharging Executive's duties hereunder on
behalf of the Company and/or its respective subsidiaries and affiliates, so long
as Executive acted in good faith within the course and scope of Executive's
duties with respect to the matter giving rise to the claim or Damages for which
Executive seeks indemnification.
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10. GENERAL PROVISIONS
10.1. Assignment; Binding Effect. Neither the Company or Executive may
assign, delegate or otherwise transfer this Agreement or any of their respective
rights or obligations hereunder without the prior written consent of the other
party. Any attempted prohibited assignment or delegation shall be void. This
Agreement shall be binding upon and inure to the benefit of any permitted
successors or assigns of the parties and the heirs, executors, administrators
and/or personal representatives of Executive.
10.2. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:
If to the Company Arden Realty, Inc.
or Arden: 11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attention: President
Facsimile:(310) 966-2699
If to Executive: Diana M. Laing
c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
Any party may change its address for the purpose of this Section 10.2
by giving the other party written notice of its new address in the manner set
forth above.
10.3. Entire Agreement. This Agreement constitutes the entire agreement
of the parties, and supersedes all prior agreements.
10.4. Amendments; Waivers. This Agreement may be amended or modified,
and any of the terms and covenants may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by the party
waiving compliance. Any waiver by any party in any one or more instances of any
term or covenant contained in this Agreement shall neither be deemed to be nor
construed as a further or continuing waiver of any such term or covenant of this
Agreement.
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10.5. Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.
10.6. Attorney's Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Agreement, each of the parties hereto shall be responsible for payment of
any attorneys' fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding.
10.7. Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
10.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
THE COMPANY:
ARDEN REALTY, INC.,
a Maryland corporation
By:_______________________________
Victor J. Coleman
President
EXECUTIVE:
__________________________________
Diana M. Laing
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EXHIBIT 10.28
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made and
entered into as of August 4, 1998, by and between ARDEN REALTY, INC., a Maryland
corporation (the "Company") and ANDREW J. SOBEL ("Executive").
1. EMPLOYMENT
The Company hereby employs Executive and Executive hereby accepts
employment upon the terms and conditions set forth below.
2. TERM AND RENEWAL
2.1. Term. The term of this Agreement shall commence on January 1,
1998 (the "Effective Date"), and shall continue for three years from the
Effective Date (the "Original Employment Term"), on the terms and conditions set
forth below, unless sooner terminated as provided in Section 5.
2.2. Extension. Following the expiration of the Original Employment
Term and provided that this Agreement has not been terminated pursuant to
Section 5, and every year thereafter, the Agreement shall be automatically
renewed for an additional 12-month period, effective on each anniversary date of
the Effective Date; provided, that if a Change in Control (as defined in Section
5.6), occurs during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than twenty-four (24)
months beyond the month in which such Change in Control occurred.
3. COMPENSATION
3.1. Base Compensation. For the services to be rendered by Executive
under this Agreement, Executive shall be entitled to receive, commencing as of
the Effective Date, an initial annual base compensation ("Base Compensation") of
$187,500, payable in substantially equal semi-monthly installments. The Base
Compensation shall be reviewed and adjusted annually as determined by the
Compensation Committee (the "Compensation Committee") of the Board of Directors
(the "Board") of The Company.
3.2. Bonus Compensation. The Compensation Committee shall review
Executive's performance at least annually during each year of the Original
Employment Term and during any periods of automatic extension of this Agreement
pursuant to Section 2.2 and cause the Company to award Executive a cash bonus
which the Compensation Committee shall reasonably determine as fairly
compensating and rewarding Executive for services rendered to the Company and/or
as an incentive for continued service to the Company. The amount of such cash
bonus shall be determined in the sole and absolute discretion of the
Compensation Committee and shall be dependent on, among other things, the
achievement of certain per share performance levels by the Company, including,
without limitation, growth in funds from operations, and Executive's performance
and contribution to increasing the funds from operations.
<PAGE> 2
3.3. "Gross-Up" of Compensation.
(a) 280G "Gross-Up".
(i) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the "Excise Tax"), then
Executive shall be entitled to receive from the Company an additional payment
(the "Gross-Up Payment") in an amount such that the net amount of the Payment
and the Gross-Up Payment retained by Executive after the calculation and
deduction of all Excise Taxes (including any interest or penalties imposed with
respect to such taxes) on the Payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Section
3.3(a) and taking into account any lost or reduced tax deductions on account of
the Gross-Up Payment, shall be equal to the Payment;
(ii) All determinations required to be made under
this Section 3.3(a), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be used in
arriving at such determinations shall be made by the Accountants (as defined
below) which shall provide Executive and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15) business
days of the receipt of notice from Executive or the Company that Executive has
received or will receive a Payment. For the purposes of this Section 3.3(a), the
"Accountants" shall mean the Company's independent certified public accountants
serving immediately prior to the Change in Control (as defined in Section 5.6).
In the event that the Accountants are also serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accountants hereunder). All fees and expenses of the Accountants shall
be borne solely by the Company. For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the opinion
of the Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay Federal income taxes at the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and to pay any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net
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of the maximum reduction in federal income taxes which could be obtained from
the deduction of such state or local taxes if paid in such year (determined
without regard to limitations on deductions based upon the amount of Executive's
adjusted gross income), and to have otherwise allowable deductions for federal,
state and local income tax purposes at least equal to those disallowed because
of the inclusion of the Gross-Up Payment in Executive's adjusted gross income.
To the extent practicable, any Gross-Up Payment with respect to any Payment
shall be paid by the Company at the time Executive is entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than five days
after the receipt by Executive of the Accountant's determination. Any
determination by the Accountants shall be binding upon the Company and
Executive. As a result of uncertainty in the application of section 4999 of the
Code at the time of the initial determination by the Accountants hereunder, it
is possible that the Gross-Up Payment made will have been an amount less than
the Company should have paid pursuant to this Section 3.3(a) (the
"Underpayment"). In the event that the Company exhausts its remedies pursuant to
Section 3.3(a)(ii) and Executive is required to make a payment of any Excise
Tax, the Underpayment shall be promptly paid by the Company to or for
Executive's benefit; and
(iii) Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable after Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes, interest and/or penalties with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
(A) give the Company any information
reasonably requested by the Company relating to such claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith
in order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such
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representation and payment of all related costs and expenses. Without limiting
the foregoing provisions of this Section 3.3(a), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis, and shall
indemnify Executive for and hold Executive harmless from, on an after-tax basis,
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance (including as a result of any forgiveness by
the Company of such advance); provided, further, that any extension of the
statute of limitations relating to the payment of taxes for the taxable year of
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
3.4. Loan. Subject to approval of the Shareholders of the Company of
an increase in the number of shares available through The 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited Partnership, in an
amount sufficient to provide Executive with shares equal in value to $1,000,000
without reducing the number of shares available through the Plan for any other
purpose, the Company shall lend to Executive $1,000,000, which Executive may use
solely for the purpose of acquiring restricted stock of the Company through The
1996 Stock Option and Incentive Plan of Arden Realty, Inc. and Arden Realty
Limited Partnership, pursuant to the terms of the note attached hereto as
Exhibit "A" (the "Loan"). The stock acquired with the proceeds of this loan
shall be pledged as security for the Loan in accordance with the terms of the
Pledge Agreement attached hereto as Exhibit "B."
3.5. Benefits.
(a) Medical Insurance. The Company shall provide to
Executive, Executive's spouse and children, at its sole cost, such health,
dental and optical insurance as the Company may from time to time make available
to its other executive employees.
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(b) Life and Disability Insurance. The Company shall provide
Executive such disability and/or life insurance as the Company in its sole
discretion may from time to time make available to its other executive
employees.
(c) Pension Plans, Etc. The Executive shall be entitled to
participate in all pension, 401(k) and other employee plans and benefits
established by the Company on at least the same terms as the Company's other
executive employees.
3.6. Method of Payment. The monetary compensation payable and any
benefits due to Executive hereunder may be paid or provided in whole or in part,
from time to time, by the Company and/or its respective subsidiaries and
affiliates, but shall at all times remain the responsibility of the Company.
4. POSITION AND DUTIES
4.1. Position. Executive shall serve as Executive Vice President and
Director of Property Operations. The Company agrees that the duties that may be
assigned Executive shall be the usual and customary duties of the offices of
Executive Vice President and Director of Leasing. Executive shall have such
Executive power and authority as shall reasonably be required to enable
Executive to discharge the duties of such offices. Executive may, at Executive's
discretion, serve the Company and/or its respective subsidiaries and affiliates
in other offices and capacities in addition to the foregoing, but shall not be
required to do so. In the event the Company and Executive mutually agree that
Executive shall terminate Executive's service in any one or more of the
aforementioned capacities, or Executive's service in one or more of the
aforementioned capacities is terminated, Executive's compensation, as specified
in this Agreement, shall not be diminished or reduced in any manner.
4.2. Devotion of Time and Effort. Executive shall use Executive's
good faith best efforts and judgment in performing Executive's duties as
required hereunder and to act in the best interests of the Company. Executive
shall devote such time, attention and energies to the business of the Company as
are reasonably necessary to satisfy Executive's required responsibilities and
duties hereunder.
4.3. Other Activities. Executive may engage in other activities for
Executive's own account while employed hereunder, including without limitation
charitable, community and other business activities, provided that such other
activities do not materially interfere with the performance of Executive's
duties hereunder.
4.4. Vacation. It is understood and agreed that Executive shall be
entitled to three (3) weeks vacation per year. During such vacation periods,
Executive shall not be relieved of Executive's duties under this Agreement and
there will be no abatement or reduction of Executive's compensation hereunder.
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4.5. Business Expenses. The Company shall promptly, but in no event
later than ten days after submission of a claim of expenditure, reimburse
Executive for all reasonable business expenses including, without limitation,
business seminar fees, professional association dues, bar dues, country club
membership fees and other reasonable entertainment expenses incurred by
Executive in connection with the business of the Company and/or its respective
subsidiaries and affiliates, upon presentation to the Company of written
receipts for such expenses. Such reimbursement shall also include, but not be
limited to, reimbursement for all reasonable travel expenses, including all
airfare, hotel and rental car expenses, incurred by Executive in traveling in
connection with the business of the Company.
4.6. Company's Obligations. The Company shall provide Executive with
any and all necessary or appropriate current financial information and access to
current information and records regarding all material transactions involving
the Company and/or its representative subsidiaries and affiliates, including but
not limited to acquisition of assets, personnel contracts, dispositions of
assets, service agreements and registration statements or other state or federal
filings or disclosures, reasonably necessary for Executive to carry out
Executive's duties and responsibilities hereunder. In addition, the Company
agrees to provide Executive, as a condition to Executive's services hereunder,
such staff, equipment and office space as is reasonably necessary for Executive
to perform Executive's duties hereunder.
5. TERMINATION
5.1. By the Company Without Cause. The Company may terminate this
Agreement without "cause" (as hereinafter defined) at any time following the
Effective Date, provided that the Company first delivers to Executive the
Company's written election to terminate this Agreement at least 90 days prior to
the effective date of termination.
5.2. Severance Payment.
(a) Amount. In the event the Company terminates Executive's
services hereunder pursuant to Section 5.1, Executive shall continue to render
services to the Company pursuant to this Agreement until the date of termination
and shall continue to receive compensation, as provided hereunder, through the
termination date. In addition to other compensation payable to Executive for
services rendered through the termination date, the Company shall pay Executive
no later than the date of such termination, as a single severance payment, an
amount equal to the sum of: (i) three times Executive's average annual Base
Compensation paid hereunder for the preceding thirty-six month period (or, if
Executive has been employed less than thirty-six months, the average annual Base
Compensation for the period employed) plus (ii) an amount equal to three times
the highest annual bonus received by Executive during the preceding thirty-six
month period (or during the period Executive has been employed hereunder if
shorter than thirty-six months) (collectively, the "Severance Amount"). In
addition to payment of the Severance Amount, any unvested stock options or
restricted stock held by Executive shall become fully vested as of the date of
termination.
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(b) Benefits. In the event Executive's employment hereunder
is terminated by the Company without cause pursuant to Section 5.1 or by
Executive pursuant to Section 5.4 or 5.6, then in addition to paying Executive
the Severance Amount and providing for the full vesting of unvested stock
options or restricted stock held by Executive, the Company shall continue to
provide to Executive and Executive's spouse and children, as applicable, all of
the benefits described in Section 3.3 for a period of three years commencing on
the date of such termination (the "Severance Benefits").
5.3. By The Company For Cause. The Company may terminate Executive
for cause at any time, upon written notice to Executive. For purposes of this
Agreement, "cause" shall mean:
(a) Executive's conviction for commission of a felony or a
crime involving moral turpitude;
(b) Executive's willful commission of any act of theft,
embezzlement or misappropriation against the Company which, in any such case, is
materially and demonstrably injurious to the Company;
(c) Executive's willful and continued failure to
substantially perform Executive's duties hereunder (other than such failure
resulting from Executive's incapacity due to physical or mental illness), which
failure is not remedied within a reasonable time after written demand for
substantial performance is delivered by the Company which specifically
identifies the manner in which the Company believes that Executive has not
substantially performed Executive's duties; or
(d) Executive's death or Disability (as hereinafter
defined).
For purposes of this Section 5.3, no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith.
In the event Executive is terminated for cause pursuant to this Section
5.3, Executive shall have the right to receive Executive's compensation as
otherwise provided under this Agreement through the effective date of
termination. Executive shall have no further right to receive compensation or
other consideration from the Company, or have any other remedy whatsoever
against the Company, as a result of this Agreement or the termination of
Executive pursuant to this Section 5.3, except as set forth below with respect
to a termination due to Executive's Disability.
In the event Executive is terminated by reason of Executive's death or
Disability, the Company shall immediately pay Executive the Severance Amount and
shall continue to provide to provide to Executive's spouse and children, as
applicable, all of the benefits described in Section 3.1 for a period of three
years commencing on the date of such termination. Said payment shall be in
addition to any disability insurance payments to which Executive is otherwise
entitled and any other compensation earned by Executive hereunder. In addition,
any unvested stock options or restricted stock held by Executive shall become
fully vested as of the
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<PAGE> 8
date of termination. For purposes of this Agreement, the term "Disability" shall
mean a physical or mental incapacity as a result of which Executive becomes
unable to continue the proper performance of Executive's duties hereunder for
six consecutive calendar months or for shorter periods aggregating 180 business
days in any 12 month period, but only to the extent that such definition does
not violate the Americans with Disabilities Act.
5.4. By Executive For Good Reason. Executive may terminate this
Agreement for good reason upon at least 10 days prior written notice to the
Company. For purposes of this Agreement, "good reason" shall mean:
(a) the Company's material breach of any of its respective
obligations hereunder and either such breach is incurable or, if curable, has
not been cured within fifteen (15) days following receipt of written notice by
Executive to the Company of such breach by the Company;
(b) any removal of Executive from one or more of the offices
specified in the first sentence of Section 4.1 without cause and without
Executive's prior written consent; or
(c) any material decrease in Executive's authority or
responsibilities hereunder without Executive's prior written consent.
In the event that Executive terminates this Agreement for good reason
pursuant to this Section 5.4, Executive shall have the right to receive
Executive's compensation as provided hereunder through the effective date of
termination and shall also have the same rights and remedies against the Company
as Executive would have had if the Company had terminated Executive's employment
without cause pursuant to Section 5.1 (including the right to receive the
Severance Amount payable and the Severance Benefits to be provided under Section
5.2).
5.5. Executive's Voluntary Termination. Executive may, at any time,
terminate this Agreement without good reason upon written notice delivered to
the Company at least ninety (90) days prior to the effective date of
termination. In the event of such voluntary termination of this Agreement by
Executive: (i) Executive shall have the right to receive Executive's
compensation as provided hereunder through the effective date of termination,
and (ii) the Company, on the one hand, and Executive, on the other hand, shall
not have any further right or remedy against one another except as provided in
Sections 6, 7 and 8 hereof which shall remain in full force and effect.
5.6. Change in Control. Executive may terminate this Agreement, upon
at least ten (10) days' prior written notice to the Company, at any time within
two (2) years after a "change in control" (as hereinafter defined) of the
Company. In the event Executive terminates this Agreement within two (2) years
after a change in control pursuant to this Section 5.6, (i) Executive shall
continue to render services pursuant hereto and shall continue to receive
compensation, as provided hereunder, through the termination date, (ii) the
Company shall pay Executive no later than the date of such termination, as a
single severance payment, an amount equal to the Severance Amount, (iii)
following such termination, the Company shall provide the
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Severance Benefits as required by Section 5.2, and (iv) any outstanding balance
on the Loan shall be forgiven in its entirety. For purposes of this Agreement, a
"change in control" shall mean the occurrence of any of the following events:
(a) the individuals constituting the Board as of the date of
the Effective Date (the "Incumbent Board") cease for any reason to constitute at
least two-thirds (2/3rds) of the Board; provided, however, that if the election,
or nomination for election by the Company's stockholders, of any new director
was approved by a vote of at least two-thirds (2/3rds) of the Incumbent Board,
such new director shall be considered a member of the Incumbent Board;
(b) an acquisition of any voting securities of the Company
(the "Voting Securities") by any "person" (as the term "person" is used for
purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the
1934 Act) ("Beneficial Ownership") of 20% or more of the combined voting power
of the Company's then outstanding Voting Securities; or
(c) approval by the stockholders of the Company of:
(i) a merger, consolidation, share exchange or
reorganization involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the
outstanding voting securities of the corporation that is the
successor in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange or
reorganization; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the
Surviving Company;
(ii) a complete liquidation or dissolution of the
Company; or
(iii) an agreement for the sale or other disposition
of all or substantially all of the assets of the Company or the Company.
(d) any Person is or becomes the Beneficial Owner of
securities of the Company representing ten percent (10%) or more of the combined
voting power of the Company's then outstanding securities and (A) the identity
of the Chief Executive Officer of the Company is
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changed during the period beginning sixty (60) days before the attainment of the
ten percent (10%) beneficial ownership and ending two (2) years thereafter, or
(B) individuals constituting at least one-third (1/3) of the members of the
Board at the beginning of such period shall leave the Board during the period
beginning sixty (60) days before the attainment of the ten percent (10%)
beneficial ownership and ending two (2) years thereafter.
6. CONFIDENTIALITY
During the term of Executive's employment under this Agreement,
Executive will have access to and become acquainted with various information
relating to the Company's business operations, marketing data, business plans,
strategies, employees, contracts, financial records and accounts, projections
and budgets, and similar information. Executive agrees that to the extent such
information is not generally available to the public and gives the Company an
advantage over competitors who do not know of or use such information, such
information and documents constitute "trade secrets" of the Company. Executive
further agrees that all such information and documents relating to the business
of the Company, whether they are prepared by Executive or come into Executive's
possession in any other way, are owned by the Company and shall remain the
exclusive property of the Company. Executive shall not misuse, misappropriate or
disclose any trade secrets of the Company, directly or indirectly, or use them
for Executive's own benefit, either during the term of this Agreement or at any
time thereafter, except as may be necessary or appropriate in the course of
Executive's employment with the Company, unless such action is either previously
agreed to in writing by the Company or required by law.
7. NON-SOLICITATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not solicit or induce any of the
Company's employees, agents or independent contractors to end their relationship
with the Company, or recruit, hire or otherwise induce any such person to
perform services for Executive, or any other person, firm or company. The
restrictions set forth in this Section 7 shall not apply if Executive's
employment is terminated pursuant to Section 5.1, 5.4 or 5.6.
8. NON-COMPETITION AFTER TERMINATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not engage in the acquisition,
renovation, management or leasing of any office properties in the Los Angeles,
Orange and San Diego counties of Southern California. In addition, Executive
shall not engage in any active or passive investment in or reasonably relating
to the acquisition, renovation, management or leasing of office properties in
the Los Angeles, Orange and San Diego counties of Southern California for a
period of one (1) year following the date of termination, with the exception of
the ownership of up to one percent (1%) of the securities of any publicly-traded
companies involved in such activities. Nothing herein shall relieve or limit
Executive's obligation to comply with Sections 6 and 7. The restrictions set
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forth in this Section 8 shall not apply if Executive's employment is terminated
pursuant to Section 5.1, 5.4 or 5.6.
9. INDEMNIFICATION
To the fullest extent permitted under applicable law, the Company shall
indemnify, defend and hold Executive harmless from and against any and all
causes of action, claims, demands, liabilities, damages, costs and expenses of
any nature whatsoever (collectively, "Damages") directly or indirectly arising
out of or relating to Executive discharging Executive's duties hereunder on
behalf of the Company and/or its respective subsidiaries and affiliates, so long
as Executive acted in good faith within the course and scope of Executive's
duties with respect to the matter giving rise to the claim or Damages for which
Executive seeks indemnification.
10. GENERAL PROVISIONS
10.1. Assignment; Binding Effect. Neither the Company or Executive may
assign, delegate or otherwise transfer this Agreement or any of their respective
rights or obligations hereunder without the prior written consent of the other
party. Any attempted prohibited assignment or delegation shall be void. This
Agreement shall be binding upon and inure to the benefit of any permitted
successors or assigns of the parties and the heirs, executors, administrators
and/or personal representatives of Executive.
10.2. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:
<TABLE>
<S> <C>
If to the Company Arden Realty, Inc.
or Arden: 11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attention: President
Facsimile:(310) 966-2699
If to Executive: Andrew J. Sobel
c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
</TABLE>
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Any party may change its address for the purpose of this Section 10.2 by
giving the other party written notice of its new address in the manner set forth
above.
10.3. Entire Agreement. This Agreement constitutes the entire
agreement of the parties, and supersedes all prior agreements.
10.4. Amendments; Waivers. This Agreement may be amended or modified,
and any of the terms and covenants may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by the party
waiving compliance. Any waiver by any party in any one or more instances of any
term or covenant contained in this Agreement shall neither be deemed to be nor
construed as a further or continuing waiver of any such term or covenant of this
Agreement.
10.5. Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.
10.6. Attorney's Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Agreement, each of the parties hereto shall be responsible for payment of
any attorneys' fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding.
10.7. Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
10.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
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THE COMPANY:
ARDEN REALTY, INC.,
a Maryland corporation
By:
----------------------
Victor J. Coleman
President
EXECUTIVE:
- --------------------------
Andrew J. Sobel
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<PAGE> 1
EXHIBIT 10.29
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of August 4, 1998, by and between ARDEN REALTY, INC., a
Maryland corporation (the "Company") and HERBERT PORTER ("Executive").
1. EMPLOYMENT
The Company hereby employs Executive and Executive hereby accepts
employment upon the terms and conditions set forth below.
2. TERM AND RENEWAL
2.1. Term. The term of this Agreement shall commence on January 1,
1998 (the "Effective Date"), and shall continue for two years from the Effective
Date (the "Original Employment Term"), on the terms and conditions set forth
below, unless sooner terminated as provided in Section 5.
2.2. Extension. Following the expiration of the Original Employment
Term and provided that this Agreement has not been terminated pursuant to
Section 5, and every year thereafter, the Agreement shall be automatically
renewed for an additional 12-month period, effective on each anniversary date of
the Effective Date; provided, that if a Change in Control (as defined in Section
5.6), occurs during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than two (2) years
beyond the month in which such Change in Control occurred.
3. COMPENSATION
3.1. Base Compensation. For the services to be rendered by Executive
under this Agreement, Executive shall be entitled to receive, commencing as of
the Effective Date, an initial annual base compensation ("Base Compensation") of
$143,000, payable in substantially equal semi-monthly installments. The Base
Compensation shall be reviewed and adjusted annually as determined by the
Compensation Committee (the "Compensation Committee") of the Board of Directors
(the "Board") of The Company.
3.2. Bonus Compensation. The Compensation Committee shall review
Executive's performance at least annually during each year of the Original
Employment Term and during any periods of automatic extension of this Agreement
pursuant to Section 2.2 and cause the Company to award Executive a cash bonus
which the Compensation Committee shall reasonably determine as fairly
compensating and rewarding Executive for services rendered to the Company and/or
as an incentive for continued service to the Company. The amount of such cash
bonus shall be determined in the sole and absolute discretion of the
Compensation Committee and shall be dependent on, among other things, the
achievement of certain per share performance levels by the Company, including,
without limitation, growth in funds from operations, and Executive's performance
and contribution to increasing the funds from operations.
<PAGE> 2
3.3. "Gross-Up" of Compensation.
(a) 280G "Gross-Up".
(i) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the "Excise Tax"), then
Executive shall be entitled to receive from the Company an additional payment
(the "Gross-Up Payment") in an amount such that the net amount of the Payment
and the Gross-Up Payment retained by Executive after the calculation and
deduction of all Excise Taxes (including any interest or penalties imposed with
respect to such taxes) on the Payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Section
3.3(a) and taking into account any lost or reduced tax deductions on account of
the Gross-Up Payment, shall be equal to the Payment;
(ii) All determinations required to be made under
this Section 3.3(a), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be used in
arriving at such determinations shall be made by the Accountants (as defined
below) which shall provide Executive and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15) business
days of the receipt of notice from Executive or the Company that Executive has
received or will receive a Payment. For the purposes of this Section 3.3(a), the
"Accountants" shall mean the Company's independent certified public accountants
serving immediately prior to the Change in Control (as defined in Section 5.6).
In the event that the Accountants are also serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accountants hereunder). All fees and expenses of the Accountants shall
be borne solely by the Company. For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the opinion
of the Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay Federal income taxes at the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and to pay any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from the deduction
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<PAGE> 3
of such state or local taxes if paid in such year (determined without regard to
limitations on deductions based upon the amount of Executive's adjusted gross
income), and to have otherwise allowable deductions for federal, state and local
income tax purposes at least equal to those disallowed because of the inclusion
of the Gross-Up Payment in Executive's adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be paid by
the Company at the time Executive is entitled to receive the Payment and in no
event will any Gross-Up Payment be paid later than five days after the receipt
by Executive of the Accountant's determination. Any determination by the
Accountants shall be binding upon the Company and Executive. As a result of
uncertainty in the application of section 4999 of the Code at the time of the
initial determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount less than the Company should have
paid pursuant to this Section 3.3(a) (the "Underpayment"). In the event that the
Company exhausts its remedies pursuant to Section 3.3(a)(ii) and Executive is
required to make a payment of any Excise Tax, the Underpayment shall be promptly
paid by the Company to or for Executive's benefit; and
(iii) Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable after Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes, interest and/or penalties with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
(A) give the Company any information
reasonably requested by the Company relating to such claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith
in order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such
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<PAGE> 4
representation and payment of all related costs and expenses. Without limiting
the foregoing provisions of this Section 3.3(a), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis, and shall
indemnify Executive for and hold Executive harmless from, on an after-tax basis,
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance (including as a result of any forgiveness by
the Company of such advance); provided, further, that any extension of the
statute of limitations relating to the payment of taxes for the taxable year of
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
3.4. Benefits.
(a) Medical Insurance. The Company shall provide to
Executive, Executive's spouse and children, at its sole cost, such health,
dental and optical insurance as the Company may from time to time make available
to its other executive employees.
(b) Life and Disability Insurance. The Company shall provide
Executive such disability and/or life insurance as the Company in its sole
discretion may from time to time make available to its other executive
employees.
(c) Pension Plans, Etc. The Executive shall be entitled to
participate in all pension, 401(k) and other employee plans and benefits
established by the Company on at least the same terms as the Company's other
executive employees.
3.5. Method of Payment. The monetary compensation payable and any
benefits due to Executive hereunder may be paid or provided in whole or in part,
from time to time, by the Company and/or its respective subsidiaries and
affiliates, but shall at all times remain the responsibility of the Company.
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<PAGE> 5
4. POSITION AND DUTIES
4.1. Position. Executive shall serve as Senior Vice President and
Director of Construction and Capital Improvements. The Company agrees that the
duties that may be assigned Executive shall be the usual and customary duties of
the offices of Senior Vice President and Director of Construction and Capital
Improvements. Executive shall have such Executive power and authority as shall
reasonably be required to enable Executive to discharge the duties of such
offices. Executive may, at Executive's discretion, serve the Company and/or its
respective subsidiaries and affiliates in other offices and capacities in
addition to the foregoing, but shall not be required to do so. In the event the
Company and Executive mutually agree that Executive shall terminate Executive's
service in any one or more of the aforementioned capacities, or Executive's
service in one or more of the aforementioned capacities is terminated,
Executive's compensation, as specified in this Agreement, shall not be
diminished or reduced in any manner.
4.2. Devotion of Time and Effort. Executive shall use Executive's
good faith best efforts and judgment in performing Executive's duties as
required hereunder and to act in the best interests of the Company. Executive
shall devote such time, attention and energies to the business of the Company as
are reasonably necessary to satisfy Executive's required responsibilities and
duties hereunder.
4.3. Other Activities. Executive may engage in other activities for
Executive's own account while employed hereunder, including without limitation
charitable, community and other business activities, provided that such other
activities do not materially interfere with the performance of Executive's
duties hereunder.
4.4. Vacation. It is understood and agreed that Executive shall be
entitled to three (3) weeks vacation per year. During such vacation periods,
Executive shall not be relieved of Executive's duties under this Agreement and
there will be no abatement or reduction of Executive's compensation hereunder.
4.5. Business Expenses. The Company shall promptly, but in no event
later than ten days after submission of a claim of expenditure, reimburse
Executive for all reasonable business expenses including, without limitation,
business seminar fees, professional association dues, bar dues, country club
membership fees and other reasonable entertainment expenses incurred by
Executive in connection with the business of the Company and/or its respective
subsidiaries and affiliates, upon presentation to the Company of written
receipts for such expenses. Such reimbursement shall also include, but not be
limited to, reimbursement for all reasonable travel expenses, including all
airfare, hotel and rental car expenses, incurred by Executive in traveling in
connection with the business of the Company.
4.6. Company's Obligations. The Company shall provide Executive with
any and all necessary or appropriate current financial information and access to
current information and records regarding all material transactions involving
the Company and/or its representative subsidiaries and affiliates, including but
not limited to acquisition of assets, personnel contracts,
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<PAGE> 6
dispositions of assets, service agreements and registration statements or other
state or federal filings or disclosures, reasonably necessary for Executive to
carry out Executive's duties and responsibilities hereunder. In addition, the
Company agrees to provide Executive, as a condition to Executive's services
hereunder, such staff, equipment and office space as is reasonably necessary for
Executive to perform Executive's duties hereunder.
5. TERMINATION
5.1. By The Company Without Cause. The Company may terminate this
Agreement without "cause" (as hereinafter defined) at any time following the
Effective Date, provided that the Company first delivers to Executive the
Company's written election to terminate this Agreement at least 90 days prior to
the effective date of termination.
5.2. Severance Payment.
(a) Amount. In the event the Company terminates Executive's
services hereunder pursuant to Section 5.1, Executive shall continue to render
services to the Company pursuant to this Agreement until the date of termination
and shall continue to receive compensation, as provided hereunder, through the
termination date. In addition to other compensation payable to Executive for
services rendered through the termination date, the Company shall pay Executive
no later than the date of such termination, as a single severance payment, an
amount equal to the sum of: (i) two times Executive's average annual Base
Compensation paid hereunder for the preceding thirty-six month period (or, if
Executive has been employed less than thirty-six months, the average annual Base
Compensation for the period employed) plus (ii) an amount equal to two times the
highest annual bonus received by Executive during the preceding thirty-six month
period (or during the period Executive has been employed hereunder if shorter
than thirty-six months) (collectively, the "Severance Amount"). In addition to
payment of the Severance Amount, any unvested stock options or restricted stock
held by Executive shall become fully vested as of the date of termination.
(b) Benefits. In the event Executive's employment hereunder
is terminated by the Company without cause pursuant to Section 5.1 or by
Executive pursuant to Section 5.4 or 5.6, then in addition to paying Executive
the Severance Amount and providing for the full vesting of unvested stock
options or restricted stock held by Executive, the Company shall continue to
provide to Executive and Executive's spouse and children, as applicable, all of
the benefits described in Section 3.3 for a period of two years commencing on
the date of such termination (the "Severance Benefits").
5.3. By The Company For Cause. The Company may terminate Executive
for cause at any time, upon written notice to Executive. For purposes of this
Agreement, "cause" shall mean:
(a) Executive's conviction for commission of a felony or a
crime involving moral turpitude;
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<PAGE> 7
(b) Executive's willful commission of any act of theft,
embezzlement or misappropriation against the Company which, in any such case, is
materially and demonstrably injurious to the Company;
(c) Executive's willful and continued failure to
substantially perform Executive's duties hereunder (other than such failure
resulting from Executive's incapacity due to physical or mental illness), which
failure is not remedied within a reasonable time after written demand for
substantial performance is delivered by the Company which specifically
identifies the manner in which the Company believes that Executive has not
substantially performed Executive's duties; or
(d) Executive's death or Disability (as hereinafter
defined).
For purposes of this Section 5.3, no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith.
In the event Executive is terminated for cause pursuant to this
Section 5.3, Executive shall have the right to receive Executive's compensation
as otherwise provided under this Agreement through the effective date of
termination. Executive shall have no further right to receive compensation or
other consideration from the Company, or have any other remedy whatsoever
against the Company, as a result of this Agreement or the termination of
Executive pursuant to this Section 5.3, except as set forth below with respect
to a termination due to Executive's Disability.
In the event Executive is terminated by reason of Executive's death
or Disability, the Company shall immediately pay Executive the Severance Amount
and shall continue to provide to provide to Executive's spouse and children, as
applicable, all of the benefits described in Section 3.1 for a period of three
years commencing on the date of such termination. Said payment shall be in
addition to any disability insurance payments to which Executive is otherwise
entitled and any other compensation earned by Executive hereunder. In addition,
any unvested stock options or restricted stock held by Executive shall become
fully vested as of the date of termination. For purposes of this Agreement, the
term "Disability" shall mean a physical or mental incapacity as a result of
which Executive becomes unable to continue the proper performance of Executive's
duties hereunder for six consecutive calendar months or for shorter periods
aggregating 180 business days in any 12 month period, but only to the extent
that such definition does not violate the Americans with Disabilities Act.
5.4. By Executive For Good Reason. Executive may terminate this
Agreement for good reason upon at least 10 days prior written notice to the
Company. For purposes of this Agreement, "good reason" shall mean:
(a) the Company's material breach of any of its respective
obligations hereunder and either such breach is incurable or, if curable, has
not been cured within fifteen (15) days following receipt of written notice by
Executive to the Company of such breach by the Company;
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<PAGE> 8
(b) any removal of Executive from one or more of the offices
specified in the first sentence of Section 4.1 without cause and without
Executive's prior written consent; or
(c) any material decrease in Executive's authority or
responsibilities hereunder without Executive's prior written consent.
In the event that Executive terminates this Agreement for good
reason pursuant to this Section 5.4, Executive shall have the right to receive
Executive's compensation as provided hereunder through the effective date of
termination and shall also have the same rights and remedies against the Company
as Executive would have had if the Company had terminated Executive's employment
without cause pursuant to Section 5.1 (including the right to receive the
Severance Amount payable and the Severance Benefits to be provided under Section
5.2).
5.5. Executive's Voluntary Termination. Executive may, at any time,
terminate this Agreement without good reason upon written notice delivered to
the Company at least ninety (90) days prior to the effective date of
termination. In the event of such voluntary termination of this Agreement by
Executive: (i) Executive shall have the right to receive Executive's
compensation as provided hereunder through the effective date of termination,
and (ii) the Company, on the one hand, and Executive, on the other hand, shall
not have any further right or remedy against one another except as provided in
Sections 6, 7 and 8 hereof which shall remain in full force and effect.
5.6. Change in Control. Executive may terminate this Agreement, upon
at least ten (10) days' prior written notice to the Company, at any time within
two (2) years after a "change in control" (as hereinafter defined) of the
Company. In the event Executive terminates this Agreement within one (1) year
after a change in control pursuant to this Section 5.6, (i) Executive shall
continue to render services pursuant hereto and shall continue to receive
compensation, as provided hereunder, through the termination date, (ii) the
Company shall pay Executive no later than the date of such termination, as a
single severance payment, an amount equal to the Severance Amount and (iii)
following such termination, the Company shall provide the Severance Benefits as
required by Section 5.2. For purposes of this Agreement, a "change in control"
shall mean the occurrence of any of the following events:
(a) the individuals constituting the Board as of the date of
the Effective Date (the "Incumbent Board") cease for any reason to constitute at
least two-thirds (2/3rds) of the Board; provided, however, that if the election,
or nomination for election by the Company's stockholders, of any new director
was approved by a vote of at least two-thirds (2/3rds) of the Incumbent Board,
such new director shall be considered a member of the Incumbent Board;
(b) an acquisition of any voting securities of the Company
(the "Voting Securities") by any "person" (as the term "person" is used for
purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the
1934 Act) ("Beneficial Ownership") of 20% or more of the combined voting power
of the Company's then outstanding Voting Securities; or
8
<PAGE> 9
(c) approval by the stockholders of the Company of:
(i) a merger, consolidation, share exchange or
reorganization involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the
outstanding voting securities of the corporation that is the
successor in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange or
reorganization; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the
Surviving Company;
(ii) a complete liquidation or dissolution of the
Company; or
(iii) an agreement for the sale or other disposition of
all or substantially all of the assets of the Company.
(d) any Person is or becomes the Beneficial Owner of
securities of the Company representing ten percent (10%) or more of the combined
voting power of the Company's then outstanding securities and (A) the identity
of the Chief Executive Officer of the Company is changed during the period
beginning sixty (60) days before the attainment of the ten percent (10%)
beneficial ownership and ending two (2) years thereafter, or (B) individuals
constituting at least one-third (1/3) of the members of the Board at the
beginning of such period shall leave the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial ownership
and ending two (2) years thereafter.
6. CONFIDENTIALITY
During the term of Executive's employment under this Agreement,
Executive will have access to and become acquainted with various information
relating to the Company's business operations, marketing data, business plans,
strategies, employees, contracts, financial records and accounts, projections
and budgets, and similar information. Executive agrees that to the extent such
information is not generally available to the public and gives the Company an
advantage over competitors who do not know of or use such information, such
information and documents constitute "trade secrets" of the Company. Executive
further agrees that all such information and documents relating to the business
of the Company, whether they are prepared by Executive or come into Executive's
possession in any other way, are owned by the Company and shall remain the
exclusive property of the Company. Executive shall not misuse, misappropriate or
disclose
9
<PAGE> 10
any trade secrets of the Company, directly or indirectly, or use them for
Executive's own benefit, either during the term of this Agreement or at any time
thereafter, except as may be necessary or appropriate in the course of
Executive's employment with the Company, unless such action is either previously
agreed to in writing by the Company or required by law.
7. NON-SOLICITATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not solicit or induce any of the
Company's employees, agents or independent contractors to end their relationship
with the Company, or recruit, hire or otherwise induce any such person to
perform services for Executive, or any other person, firm or company. The
restrictions set forth in this Section 7 shall not apply if Executive's
employment is terminated pursuant to Section 5.1, 5.4 or 5.6.
8. NON-COMPETITION AFTER TERMINATION
For a period of one (1) year following the date Executive's employment
hereunder is terminated, Executive shall not engage in the acquisition,
renovation, management or leasing of any office properties in the Los Angeles,
Orange and San Diego counties of Southern California. In addition, Executive
shall not engage in any active or passive investment in or reasonably relating
to the acquisition, renovation, management or leasing of office properties in
the Los Angeles, Orange and San Diego counties of Southern California for a
period of one (1) year following the date of termination, with the exception of
the ownership of up to one percent (1%) of the securities of any publicly-traded
companies involved in such activities. Nothing herein shall relieve or limit
Executive's obligation to comply with Sections 6 and 7. The restrictions set
forth in this Section 8 shall not apply if Executive's employment is terminated
pursuant to Section 5.1, 5.4 or 5.6.
9. INDEMNIFICATION
To the fullest extent permitted under applicable law, the Company shall
indemnify, defend and hold Executive harmless from and against any and all
causes of action, claims, demands, liabilities, damages, costs and expenses of
any nature whatsoever (collectively, "Damages") directly or indirectly arising
out of or relating to Executive discharging Executive's duties hereunder on
behalf of the Company and/or its respective subsidiaries and affiliates, so long
as Executive acted in good faith within the course and scope of Executive's
duties with respect to the matter giving rise to the claim or Damages for which
Executive seeks indemnification.
10. GENERAL PROVISIONS
10.1. Assignment; Binding Effect. Neither the Company or Executive may
assign, delegate or otherwise transfer this Agreement or any of their respective
rights or obligations hereunder without the prior written consent of the other
party. Any attempted prohibited assignment or delegation shall be void. This
Agreement shall be binding upon and inure to the
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<PAGE> 11
benefit of any permitted successors or assigns of the parties and the heirs,
executors, administrators and/or personal representatives of Executive.
10.2. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:
If to the Company Arden Realty, Inc.
or Arden: 11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attention: President
Facsimile:(310) 966-2699
If to Executive: Herbert Porter
c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
Any party may change its address for the purpose of this Section
10.2 by giving the other party written notice of its new address in the manner
set forth above.
10.3. Entire Agreement. This Agreement constitutes the entire
agreement of the parties, and supersedes all prior agreements.
10.4. Amendments; Waivers. This Agreement may be amended or modified,
and any of the terms and covenants may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by the party
waiving compliance. Any waiver by any party in any one or more instances of any
term or covenant contained in this Agreement shall neither be deemed to be nor
construed as a further or continuing waiver of any such term or covenant of this
Agreement.
10.5. Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period
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<PAGE> 12
of time and geographical area, and to the maximum extent in all other respects,
as to which it is valid and enforceable, all as determined by such court in such
action.
10.6. Attorney's Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Agreement, each of the parties hereto shall be responsible for payment of
any attorneys' fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding.
10.7. Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
10.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
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<PAGE> 13
THE COMPANY:
ARDEN REALTY, INC.,
a Maryland corporation
By:
-----------------------------------
Victor J. Coleman
President
EXECUTIVE:
- --------------------------------------
Herbert Porter
13
<PAGE> 1
EXHIBIT 10.30
PROMISSORY NOTE
$1,000,000.00 Beverly Hills, California
August 14, 1998
FOR VALUE RECEIVED, the undersigned, Diana M. Laing (the
"Borrower") promises to pay to Arden Realty, Inc., a Maryland Corporation, (the
"Company"), or order, the principal amount of one million dollars ($1,000,000)
with interest from the date hereof on the unpaid principal balance under this
Note at the rate of six percent (6%) per annum (on the basis of a 365-day year
and the actual number of days elapsed). The principal amount of this Note shall
be due and payable on or before the earlier of six years from the date of this
Note, or the date on which the indebtedness under this Note is accelerated as
provided for under this Note or the Pledge Agreement (as defined below). All
accrued and unpaid interest under this Note shall be due and payable
concurrently with principal.
All payments under this Note shall be made to the Company or its
order, in lawful money of the United States of America at the offices of the
Company at its then principal place of business or at such other place as the
Company or any holder hereof shall designate for such purpose from time to time.
Each payment under this Note shall be applied in the following
order: (i) to the payment of costs and expenses provided for under this Note or
the Pledge Agreement; (ii) to the payment of accrued and unpaid interest; and
(iii) to the payment of outstanding principal. The Company and each holder
hereof shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments under this Note.
<PAGE> 2
This note may be prepaid in whole or in part at any time, after
five (5) days written notice of Borrower's intention to make any such
prepayment, which notice shall specify the date and amount of such prepayment.
Any prepayment shall be without penalty except that interest shall be paid to
the date of payment on the principal amount prepaid. After any partial
prepayment hereunder, interest shall be computed on the principal balance due
after deducting the principal portion of such prepayment. Any such partial
prepayment shall be applied against the principal due at maturity and not
against any amount forgiven pursuant to the next paragraph.
Provided that Borrower is employed by the Company as of the
following anniversary dates hereof, the outstanding principal amount of this
Note set forth opposite such anniversary below shall be forgiven, and Borrower
shall have no obligation to repay such principal amount under this Note as
follows:
<TABLE>
<CAPTION>
ANNIVERSARY PRINCIPAL AMOUNT FORGIVEN
<S> <C>
Three $100,000.00
Four $166,666.67
Five $200,000.00
Six $200,000.00
</TABLE>
Notwithstanding the forgiveness of principal set forth in the
previous sentence, Borrower shall be obligated to pay all interest that accrued
on such principal prior to the date it was forgiven.
Provided that Borrower is employed by the Company at the time of
a "change in control" (as hereinafter defined), the entire outstanding principal
amount of this Note as of the date of such "change in control" as well as all
interest on such principal that accrued prior to such "change in control," shall
be forgiven, and Borrower shall have no obligation to repay such
2
<PAGE> 3
principal amount or accrued interest under this Note. For purposes of this Note,
a "change in control" shall mean the occurrence of any of the following events:
(a) the individuals constituting the Board of Directors of the
Company (the "Board") as of the date of this Note (the "Incumbent Board") cease
for any reason to constitute at least two-thirds (2/3rds) of the Board;
provided, however, that if the election, or nomination for election by the
Company's stockholders, of any new director was approved by a vote of at least
two-thirds (2/3rds) of the Incumbent Board, such new director shall be
considered a member of the Incumbent Board;
(b) an acquisition of any voting securities of the Company (the
"Voting Securities") by any "person" (as the term "person" is used for purposes
of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such person has "beneficial
ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
("Beneficial Ownership") of 20% or more of the combined voting power of the
Company's then outstanding Voting Securities; or
(c) approval by the stockholders of the Company of:
(i) a merger, consolidation, share exchange or
reorganization involving the Company, unless
(A) the stockholders of the Company, immediately
before such merger, consolidation, share exchange or reorganization, own,
directly or indirectly immediately following such merger, consolidation, share
exchange or reorganization, at least 80% of the combined voting power of the
outstanding voting securities of the corporation that is the successor in such
merger, consolidation, share exchange or reorganization (the "Surviving
3
<PAGE> 4
Company") in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation, share exchange or
reorganization; and
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation, share exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the Surviving Company;
(ii) a complete liquidation or dissolution of the Company; or
(iii) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company
(d) any Person is or becomes the Beneficial Owner of securities of the
Company representing ten percent (10%) or more of the combined voting power of
the Company's then outstanding securities and (A) the identity of the Chief
Executive Officer of the Company is changed during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial ownership
and ending two (2) years thereafter, or (B) individuals constituting at least
one-third (1/3) of the members of the Board at the beginning of such period
shall leave the Board during the period beginning sixty (60) days before the
attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter.
Upon the occurrence of a default under this Note or the Pledge
Agreement, including, without limitation, failure to make any principal or
interest payment by the stated maturity (whether by acceleration, notice of
prepayment or otherwise) for such payment, interest shall thereafter accrue on
the entire unpaid principal balance under this Note, including without
limitation any delinquent interest which has been added to the principal amount
due under this Note pursuant to the terms hereof, at the rate set forth herein
plus one percent (1%) per annum
4
<PAGE> 5
(on the basis of a 365-day year and the actual number of days elapsed). In
addition, upon the occurrence of a default under this Note or the Pledge
Agreement the holder of this Note may, at its option, without notice to or
demand upon Borrower or any other party, declare immediately due and payable the
entire principal balance hereof together with all accrued and unpaid interest
thereon, plus any other amounts then owing pursuant to this Note or the Pledge
Agreement, whereupon the same shall be immediately due and payable. On each
anniversary of the date of any default under this Note and while such default is
continuing, all interest which has become payable and is then delinquent shall,
without curing the default under this Note by reason of such delinquency, be
added to the principal amount due under this Note, and shall thereafter bear
interest at the same rate as is applicable to principal, with interest on
overdue interest to bear interest, in each case to the fullest extent permitted
by applicable law, both before and after default, maturity, foreclosure,
judgment and the filing of any petition in a bankruptcy proceeding.
Notwithstanding anything in this Note to the contrary, in no event shall
interest be charged under this Note which would violate any applicable law, and
if the interest set forth in this Note would violate any law it shall be reduced
to an amount which would not violate any law.
This Note is secured under that certain Pledge Agreement, dated as of
August 14, 1998, by and between Borrower and the Company (as amended from time
to time, the "Pledge Agreement"). Reference is hereby made to the Pledge
Agreement for a description of the nature and extent of the security for this
Note and the rights with respect to such security of the holder of this Note.
Nothing herein shall be deemed to limit the rights of the Company under this
Note or the Pledge Agreement, all of which rights and remedies are cumulative.
No waiver or modification of any of the terms of this Note shall be
valid or binding unless set forth in a writing specifically referring to this
Note and signed by a duly
5
<PAGE> 6
authorized officer of the Company or any holder of this Note, and then only to
the extent specifically set forth therein.
If any default occurs in any payment due under this Note, Borrower and
all guarantors and endorsers hereof, and their successors and assigns, promise
to pay and expenses, including attorneys' fees, incurred by each holder hereof
in collecting or attempting to collect the indebtedness under this Note, whether
or not any action or proceeding is commenced. None of the provisions hereof and
none of the holder's rights or remedies under this Note on account of any past
or future defaults shall be deemed to have been waived by the holder's
acceptance of any past due payments or by any indulgence granted by the holder
to Borrower.
Notwithstanding anything to the contrary herein, if Borrower's
employment with the Company shall be terminated for any reason other than for
death or "disability" (as hereinafter defined), the outstanding principal and
accrued but unpaid interest under this Note shall become immediately due and
payable; provided, however, that if the Borrower's employment with the Company
is terminated by reason of her retirement (as determined in the sole discretion
of the Company) and immediately prior to such termination the Borrower is an
insider (as that term is interpreted in the application of the Company's Insider
Trading Policy), the terms of this Note shall remain in full force and effect
notwithstanding such termination. If Borrower's employment with the Company
shall be terminated for death or "disability," the entire outstanding principal
amount of this Note as of the date of such termination, as well as all interest
on such principal that accrued prior to such date, shall be forgiven, and
Borrower shall have no obligation to repay such principal amount or accrued
interest under this Note. For purposes of this Note, "disability" shall mean
shall mean a physical or mental incapacity as a result of which Borrower becomes
unable to continue the proper performance of Borrower's
6
<PAGE> 7
duties for six consecutive calendar months or for shorter periods
aggregating 180 business days in any 12 month period under any employment
agreement which she has entered into with the Company, but only to the extent
that such definition does not violate the Americans with Disabilities Act.
Borrower and all guarantors and endorsers hereof, and their successors
and assigns, hereby waive presentment, demand, diligence, protest and notice of
every kind (except such notices as may be required under the Pledge Agreement),
and agree that they shall remain liable for all amounts due under this Note
notwithstanding any extension of time or change in the terms of payment of this
Note granted by any holder hereof, any change, alteration or release of any
property now or hereafter securing the payment hereof or any delay or failure by
the holder hereof to exercise any rights under this Note or the Pledge
Agreement. Borrower and all guarantors and endorsers hereof, and their
successors and assigns, hereby waive the right to plead any and all statutes of
limitation as a defense to a demand under this Note to the full extent permitted
by law.
This Note shall inure to the benefit of the Company, its successors and
assigns and shall bind the heirs, executors, administrators, successors and
assigns of Borrower. Each reference herein to powers or rights of the Company
shall also be deemed a reference to the same power or right of such assignees,
to the extent of the interest assigned to them.
In the event that any one or more provisions of this Note shall be held
to be illegal, invalid or otherwise unenforceable, the same shall not affect any
other provision of this Note and the remaining provisions of this Note shall
remain in full force and effect.
This Note shall be governed by and construed in accordance with the laws
of the State of California, without giving effect to the principles thereof
relating to conflicts of law.
7
<PAGE> 8
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as
of the day and year first written above.
-------------------------------------
DIANA M. LAING
8
<PAGE> 1
EXHIBIT 10.31
PROMISSORY NOTE
$1,000,000.00 Beverly Hills, California
August 14, 1998
FOR VALUE RECEIVED, the undersigned, Andrew J. Sobel (the
"Borrower") promises to pay to Arden Realty, Inc., a Maryland Corporation, (the
"Company"), or order, the principal amount of one million dollars ($1,000,000)
with interest from the date hereof on the unpaid principal balance under this
Note at the rate of six percent (6%) per annum (on the basis of a 365-day year
and the actual number of days elapsed). The principal amount of this Note shall
be due and payable on or before the earlier of six years from the date of this
Note, or the date on which the indebtedness under this Note is accelerated as
provided for under this Note or the Pledge Agreement (as defined below). All
accrued and unpaid interest under this Note shall be due and payable
concurrently with principal.
All payments under this Note shall be made to the Company or its
order, in lawful money of the United States of America at the offices of the
Company at its then principal place of business or at such other place as the
Company or any holder hereof shall designate for such purpose from time to time.
Each payment under this Note shall be applied in the following
order: (i) to the payment of costs and expenses provided for under this Note or
the Pledge Agreement; (ii) to the payment of accrued and unpaid interest; and
(iii) to the payment of outstanding principal. The Company and each holder
hereof shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments under this Note.
<PAGE> 2
This note may be prepaid in whole or in part at any time, after five
(5) days written notice of Borrower's intention to make any such prepayment,
which notice shall specify the date and amount of such prepayment. Any
prepayment shall be without penalty except that interest shall be paid to the
date of payment on the principal amount prepaid. After any partial prepayment
hereunder, interest shall be computed on the principal balance due after
deducting the principal portion of such prepayment. Any such partial prepayment
shall be applied against the principal due at maturity and not against any
amount forgiven pursuant to the next paragraph.
Provided that Borrower is employed by the Company as of the
following anniversary dates hereof, the outstanding principal amount of this
Note set forth opposite such anniversary below shall be forgiven, and Borrower
shall have no obligation to repay such principal amount under this Note as
follows:
<TABLE>
<CAPTION>
ANNIVERSARY PRINCIPAL AMOUNT FORGIVEN
<S> <C>
Three $100,000.00
Four $166,666.67
Five $200,000.00
Six $200,000.00
</TABLE>
Notwithstanding the forgiveness of principal set forth in the
previous sentence, Borrower shall be obligated to pay all interest that accrued
on such principal prior to the date it was forgiven.
Provided that Borrower is employed by the Company at the time of a
"change in control" (as hereinafter defined), the entire outstanding principal
amount of this Note as of the date of such "change in control" as well as all
interest on such principal that accrued prior to such "change in control," shall
be forgiven, and Borrower shall have no obligation to repay such
2
<PAGE> 3
principal amount or accrued interest under this Note. For purposes of this Note,
a "change in control" shall mean the occurrence of any of the following events:
(a) the individuals constituting the Board of Directors of the
Company (the "Board") as of the date of this Note (the "Incumbent Board") cease
for any reason to constitute at least two-thirds (2/3rds) of the Board;
provided, however, that if the election, or nomination for election by the
Company's stockholders, of any new director was approved by a vote of at least
two-thirds (2/3rds) of the Incumbent Board, such new director shall be
considered a member of the Incumbent Board;
(b) an acquisition of any voting securities of the Company (the
"Voting Securities") by any "person" (as the term "person" is used for purposes
of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such person has "beneficial
ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
("Beneficial Ownership") of 20% or more of the combined voting power of the
Company's then outstanding Voting Securities; or
(c) approval by the stockholders of the Company of:
(i) a merger, consolidation, share exchange or
reorganization involving the Company, unless
(A) the stockholders of the Company, immediately
before such merger, consolidation, share exchange or reorganization, own,
directly or indirectly immediately following such merger, consolidation, share
exchange or reorganization, at least 80% of the combined voting power of the
outstanding voting securities of the corporation that is the successor in such
merger, consolidation, share exchange or reorganization (the "Surviving
3
<PAGE> 4
Company") in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation, share exchange or
reorganization; and
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation, share exchange or reorganization constitute at least
two-thirds (2/3rds) of the members of the board of directors of the Surviving
Company;
(ii) a complete liquidation or dissolution of the Company; or
(iii) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company
(d) any Person is or becomes the Beneficial Owner of securities of
the Company representing ten percent (10%) or more of the combined voting power
of the Company's then outstanding securities and (A) the identity of the Chief
Executive Officer of the Company is changed during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial ownership
and ending two (2) years thereafter, or (B) individuals constituting at least
one-third (1/3) of the members of the Board at the beginning of such period
shall leave the Board during the period beginning sixty (60) days before the
attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter.
Upon the occurrence of a default under this Note or the Pledge
Agreement, including, without limitation, failure to make any principal or
interest payment by the stated maturity (whether by acceleration, notice of
prepayment or otherwise) for such payment, interest shall thereafter accrue on
the entire unpaid principal balance under this Note, including without
4
<PAGE> 5
Note pursuant to the terms hereof, at the rate set forth herein plus one percent
(1%) per annum (on the basis of a 365-day year and the actual number of days
elapsed). In addition, upon the occurrence of a default under this Note or the
Pledge Agreement the holder of this Note may, at its option, without notice to
or demand upon Borrower or any other party, declare immediately due and payable
the entire principal balance hereof together with all accrued and unpaid
interest thereon, plus any other amounts then owing pursuant to this Note or the
Pledge Agreement, whereupon the same shall be immediately due and payable. On
each anniversary of the date of any default under this Note and while such
default is continuing, all interest which has become payable and is then
delinquent shall, without curing the default under this Note by reason of such
delinquency, be added to the principal amount due under this Note, and shall
thereafter bear interest at the same rate as is applicable to principal, with
interest on overdue interest to bear interest, in each case to the fullest
extent permitted by applicable law, both before and after default, maturity,
foreclosure, judgment and the filing of any petition in a bankruptcy proceeding.
Notwithstanding anything in this Note to the contrary, in no event shall
interest be charged under this Note which would violate any applicable law, and
if the interest set forth in this Note would violate any law it shall be reduced
to an amount which would not violate any law.
This Note is secured under that certain Pledge Agreement, dated as
of August 14, 1998, by and between Borrower and the Company (as amended from
time to time, the "Pledge Agreement"). Reference is hereby made to the Pledge
Agreement for a description of the nature and extent of the security for this
Note and the rights with respect to such security of the holder of this Note.
Nothing herein shall be deemed to limit the rights of the
5
<PAGE> 6
Company under this Note or the Pledge Agreement, all of which rights
and remedies are cumulative.
No waiver or modification of any of the terms of this Note shall be
valid or binding unless set forth in a writing specifically referring to this
Note and signed by a duly authorized officer of the Company or any holder of
this Note, and then only to the extent specifically set forth therein.
If any default occurs in any payment due under this Note, Borrower
and all guarantors and endorsers hereof, and their successors and assigns,
promise to pay and expenses, including attorneys' fees, incurred by each holder
hereof in collecting or attempting to collect the indebtedness under this Note,
whether or not any action or proceeding is commenced. None of the provisions
hereof and none of the holder's rights or remedies under this Note on account of
any past or future defaults shall be deemed to have been waived by the holder's
acceptance of any past due payments or by any indulgence granted by the holder
to Borrower.
Notwithstanding anything to the contrary herein, if Borrower's
employment with the Company shall be terminated for any reason other than for
death or "disability" (as hereinafter defined), the outstanding principal and
accrued but unpaid interest under this Note shall become immediately due and
payable; provided, however, that if the Borrower's employment with the Company
is terminated by reason of his retirement (as determined in the sole discretion
of the Company) and immediately prior to such termination the Borrower is an
insider (as that term is interpreted in the application of the Company's Insider
Trading Policy), the terms of this Note shall remain in full force and effect
notwithstanding such termination. If Borrower's employment with the Company
shall be terminated for death or "disability," the
6
<PAGE> 7
entire outstanding principal amount of this Note as of the date of such
termination, as well as all interest on such principal that accrued prior to
such date, shall be forgiven, and Borrower shall have no obligation to repay
such principal amount or accrued interest under this Note. For purposes of this
Note, "disability" shall mean shall mean a physical or mental incapacity as a
result of which Borrower becomes unable to continue the proper performance of
Borrower's duties for six consecutive calendar months or for shorter periods
aggregating 180 business days in any 12 month period under any employment
agreement which he has entered into with the Company, but only to the extent
that such definition does not violate the Americans with Disabilities Act.
Borrower and all guarantors and endorsers hereof, and their
successors and assigns, hereby waive presentment, demand, diligence, protest and
notice of every kind (except such notices as may be required under the Pledge
Agreement), and agree that they shall remain liable for all amounts due under
this Note notwithstanding any extension of time or change in the terms of
payment of this Note granted by any holder hereof, any change, alteration or
release of any property now or hereafter securing the payment hereof or any
delay or failure by the holder hereof to exercise any rights under this Note or
the Pledge Agreement. Borrower and all guarantors and endorsers hereof, and
their successors and assigns, hereby waive the right to plead any and all
statutes of limitation as a defense to a demand under this Note to the full
extent permitted by law.
This Note shall inure to the benefit of the Company, its successors
and assigns and shall bind the heirs, executors, administrators, successors and
assigns of Borrower. Each
7
<PAGE> 8
reference herein to powers or rights of the Company shall also be deemed a
reference to the same power or right of such assignees, to the extent of the
interest assigned to them.
In the event that any one or more provisions of this Note shall be
held to be illegal, invalid or otherwise unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.
This Note shall be governed by and construed in accordance with the
laws of the State of California, without giving effect to the principles thereof
relating to conflicts of law..
IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed as of the day and year first written above.
_______________________________
ANDREW J. SOBEL
8
<PAGE> 1
EXHIBIT 10.32
PLEDGE AGREEMENT
This Pledge Agreement is made and entered into as of August 14,
1998, between Diana M. Laing ("Borrower"), and Arden Realty, Inc., a Maryland
corporation (the "Company").
RECITALS
A. The Company has loaned to Borrower $1,000,000.00 as evidenced
by a promissory note dated as of August 14, 1998 (the "Note"), which was used by
Borrower to purchase an aggregate of 42,553 shares of the Company's common stock
(the "Pledged Shares") pursuant to the terms of The 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited Partnership.
B. Borrower desires to grant a security interest in the Pledged
Shares to the Company to secure payment of the Note.
AGREEMENT
Now, therefore, in consideration of the above recitals and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Creation of Security Interest. Borrower hereby grants to the
Company a security interest in all of Borrower's right, title and interest in
and to the collateral described in section 2 hereinbelow (the "Collateral") in
order to secure the payment and performance of the obligations described in
section 3 hereinbelow.
2. Collateral. The Collateral under this Pledge Agreement is:
(a) The Pledged Shares;
(b) All securities, certificates and instruments
representing or evidencing ownership of the Collateral hereunder, and all
proceeds and products of any
<PAGE> 2
Collateral hereunder, including without limitation, stock, cash, property
or other dividends, securities, rights and other property now or hereafter
at any time or from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for any or all
of such Collateral; and
(c) Any substituted or additional Collateral required to be
supplied under the terms of this Pledge Agreement.
3. Secured Obligations of Borrower. The Collateral secures and
shall hereafter secure the payment to the Company of all indebtedness now or
hereafter owed to the Company by Borrower pursuant to the Note, this Agreement
and any extensions, modifications and renewals thereof.
4. Borrower's Representations and Warranties. Borrower represents
and warrants:
(a) Borrower is (or to the extent that this Pledge Agreement
states that the Collateral is to be acquired after the date hereof, will
be) the sole owner of the Collateral; that the security interest hereunder
in the Collateral is a first, prior and perfected security interest; that
there are no security interests, liens or encumbrances upon, or adverse
claims of title to, or any other interest whatsoever in, the Collateral or
any portion thereof except that created by this Pledge Agreement; and that
no financing statement covering the Collateral or any portion thereof
exists or is on file in any public office; and
(b) Borrower has full right, power and authority to enter
into this Pledge Agreement and no consent of, or registration or filing
with, any person or entity,
2
<PAGE> 3
including the California Corporations Commissioner or any other
governmental officer or entity, is required.
5. Covenants of Borrower. Borrower covenants that:
(a) Borrower will deliver to the Company each item of
Collateral hereunder immediately upon Borrower's acquisition thereof, and
will defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein; and
(b) If, while this Pledge Agreement is in effect, any stock
dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation or other change in the capital structure is declared
or made, or proposed to be declared or made, by the Company or any issuer
of the Collateral, all substituted and additional securities issued with
respect to the Collateral shall be endorsed in blank by Borrower promptly
upon receipt thereof or otherwise appropriately transferred to the Company
in negotiable form, and all certificates or instruments evidencing such
securities shall be delivered to the Company to be held under the terms of
this Pledge Agreement in the same manner as and as part of the Collateral.
Borrower shall have the right to exercise any subscription or other rights
with respect to any Collateral, with the prior written approval of such
exercise by the Company; provided, however, that any securities which may
be issued upon exercise of any such rights shall be delivered to the
Company, with any necessary stock power, endorsed in blank and with
signatures guaranteed, to be included in the Collateral.
3
<PAGE> 4
6. Defaults and Remedies.
(a) The occurrence of any one or more of the following
events or conditions affecting Borrower shall constitute a default under
this Pledge Agreement:
(i) Borrower fails to pay any indebtedness, perform
any obligation required to be performed by her, or discharge her
liability to the Company in accordance with the terms of the Note;
or
(ii) Borrower fails to perform any obligation under
this Agreement.
(b) Upon the occurrence of a default hereunder, the Company
may, at its option, without notice to or demand upon Borrower, do any one
or more of the following:
(i) Exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code, specifically
including, without limitation, the right to recover the attorneys'
fees incurred by the Company in the enforcement of this Pledge
Agreement or in connection with Borrower's redemption of the
Collateral;
(ii) Sell the Collateral, or any portion thereof, at
any public or private sale or on any securities exchange or other
recognized market, for cash, upon credit or for future delivery, as
the Company shall deem appropriate;
(iii) Enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to
estop or prevent the Company from pursuing any other or further
remedy it may have, and any repossession or retaking or sale of the
Collateral pursuant to the terms hereof shall not operate to
4
<PAGE> 5
release Borrower until full payment of any deficiency has been made
in cash. Borrower shall reimburse the Company upon demand for, or
the Company may apply any proceeds of Collateral to, the costs and
expenses (including attorneys' fees, transfer taxes and other
charges) incurred by the Company in connection with any sale,
disposition or retention of any Collateral hereunder.
7. Miscellaneous Provisions.
(a) Notices. Notices, requests and other communications
hereunder shall be in writing and may be delivered personally or sent by
telegram, telex or first class mail to the parties addressed as follows:
To Borrower: Diana M. Laing
c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
To the Company: Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attn: President
Facsimile:(310) 966-2699
Such notices, requests and other communications sent as provided
hereinabove shall be effective when received by the addressee thereof, but
if sent by registered or certified mail, postage prepaid, shall be
effective exactly three (3) business days after being deposited in the
United States mail. The parties hereto may change their addresses by
giving notice thereof to the other parties hereto in conformity with this
section.
5
<PAGE> 6
(b) Headings. The various headings in this Pledge Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Pledge Agreement or any provision hereof.
(c) Choice of Law. This Pledge Agreement shall be construed
in accordance with and all disputes hereunder shall be governed by the
laws of the State of California, without giving effect to the conflicts of
law principals thereof.
(d) Amendments. This Pledge Agreement or any provision
hereof may be changed, waived, or terminated only by a statement in
writing signed by the party against which such change, waiver or
termination is sought to be enforced.
(e) No Waiver. No delay in enforcing or failure to enforce
any right under this Pledge Agreement by the Company shall constitute a
waiver by the Company of such right. No waiver by the Company of any
default hereunder shall be effective unless in writing, nor shall any
waiver operate as a waiver of any other default or of the same default on
a future occasion.
(f) Time of the Essence. Time is of the essence of each
provision of this Pledge Agreement of which time is an element.
(g) Binding Agreement. All rights of the Company hereunder
shall inure to the benefit of its successors and assigns. Borrower shall
not assign any of its interest under this Pledge Agreement without the
prior written consent of the Company. Any purported assignment
inconsistent with this provision shall, at the option of the Company, be
null and void.
6
<PAGE> 7
(h) Definitions. All terms not defined herein shall have the
meaning set forth in the applicable Uniform Commercial Code, except where
the context otherwise requires.
(i) Entire Agreement. This Pledge Agreement, together with
any other agreement executed in connection herewith, is intended by the
parties as a final expression of their agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof.
Acceptance of or acquiescence in a course of performance rendered under
this Pledge Agreement shall not be relevant to determine the meaning of
this Pledge Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
(j) Attorneys' Fees. If any legal action, arbitration or
other proceeding, is brought for the enforcement of this Pledge Agreement,
or because of an alleged dispute, breach or default in connection with any
of the provisions of this Pledge Agreement, each of the parties hereto
shall be responsible for payment of any attorneys' fees and other costs
incurred by them in that action or proceeding, without regard to whomever
is the prevailing party in such action or proceeding.
(k) Severability. If any provision of this Pledge Agreement
should be found to be invalid or unenforceable, all of the other
provisions shall nonetheless remain in full force and effect to the
maximum extent permitted by law.
(l) Power of Attorney. Borrower hereby appoints and
constitutes the Company as Borrower's attorney-in-fact for purposes of (i)
collecting any Collateral, and (ii) conveying any item of Collateral to
any purchaser thereof. This power of attorney is coupled with an interest
and is irrevocable by Borrower. Notwithstanding the foregoing,
7
<PAGE> 8
the Company agrees that it shall not exercise its power of attorney
granted under this Section 7(l) unless and until there is a default under
this Pledge Agreement.
(m) Counterparts. This Pledge Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but
all of which shall together constitute one and the same agreement.
(n) Termination of Pledge. This Pledge Agreement and the
security interest and pledge hereunder shall not terminate until the full
and final payment and performance of all indebtedness and obligations
secured hereunder. At such time, the Company shall reassign and deliver to
Borrower all of the Collateral hereunder which has not been sold, disposed
of, retained or applied by the Company in accordance with the terms
hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Company, and shall be at the expense of Borrower. Without
limiting the generality of the foregoing, the security interest and pledge
hereunder shall not be terminated by the transfer of any of the Collateral
hereunder from the Company to Borrower, or any person designated by
Borrower, for the purpose of ultimate sale, exchange, presentation,
collection, renewal or registration of transfer or for any other purpose.
(o) Release of Collateral. Borrower shall be permitted to
sell any of the shares of Collateral and the Company shall release such
shares from Borrower's pledge hereunder provided, however, that (i) so
long as Borrower has not sold more than the aggregate shares of common
stock of the Company beneficially owned by Borrower on or after the
employment anniversary dates as specified below, (or the Company has
consented in writing to such a sale prior to such sale):
8
<PAGE> 9
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES THAT MAY BE PERCENTAGE OF REMAINING SHARES THAT
ANNIVERSARY SOLD ON OR AFTER ANNIVERSARY MAY BE SOLD ON OR AFTER ANNIVERSARY
<S> <C> <C>
Prior to Third Anniversary None None
Three 15% 15%
Four 25% 40%
Five 30% 70%
Six 30% 100%
</TABLE>
Borrower shall pay to the Company that percentage of the net (after-tax)
proceeds from the sale of such shares equal to the percentage of shares of
common stock of the Company pledged by the Borrower to the Company as
security under this or any other agreement for obligations owing by
Borrower to the Company so sold and provided further, that if as a result
of any such sale the value of the remaining Collateral would be less than
the aggregate amount owing under the Note after such repayment plus any
other obligations of Borrower secured by the Collateral, Borrower shall
pay to the Company the lesser of (x) all of the net (after-tax) proceeds
from such sale and (y) as much of the net (after-tax) proceeds of such
sale as would be required to result in the value of the remaining
collateral being equal to or greater than the aggregate amount owing under
the Note after such repayment plus any other obligations of Borrower
secured by the Collateral and (ii) if Borrower has sold more than the
aggregate shares of common stock of the Company beneficially owned by
Borrower permitted to be sold in accordance with the table set forth above
during any fiscal quarter of the Company, Borrower shall pay to the
Company all of the net (after-tax) proceeds of the sale of such shares.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed the day and year first above written. ARDEN
REALTY, INC. BORROWER
By_________________________ _____________________________
Victor J. Coleman Diana M. Laing
President
10
<PAGE> 1
EXHIBIT 10.33
PLEDGE AGREEMENT
This Pledge Agreement is made and entered into as of August 14,
1998, between Andrew J. Sobel ("Borrower"), and Arden Realty, Inc., a Maryland
corporation (the "Company").
RECITALS
A. The Company has loaned to Borrower $1,000,000.00 as evidenced
by a promissory note dated as of August 14, 1998 (the "Note"), which was used by
Borrower to purchase an aggregate of 42,553 shares of the Company's common stock
(the "Pledged Shares") pursuant to the terms of The 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited Partnership.
B. Borrower desires to grant a security interest in the Pledged
Shares to the Company to secure payment of the Note.
AGREEMENT
Now, therefore, in consideration of the above recitals and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Creation of Security Interest. Borrower hereby grants to the
Company a security interest in all of Borrower's right, title and interest in
and to the collateral described in section 2 hereinbelow (the "Collateral") in
order to secure the payment and performance of the obligations described in
section 3 hereinbelow.
2. Collateral. The Collateral under this Pledge Agreement is:
(a) The Pledged Shares;
<PAGE> 2
(b) All securities, certificates and instruments
representing or evidencing ownership of the Collateral hereunder, and all
proceeds and products of any Collateral hereunder, including without
limitation, stock, cash, property or other dividends, securities, rights
and other property now or hereafter at any time or from time to time
received, receivable or otherwise distributed or distributable in respect
of or in exchange for any or all of such Collateral; and
(c) Any substituted or additional Collateral required to be
supplied under the terms of this Pledge Agreement.
3. Secured Obligations of Borrower. The Collateral secures and
shall hereafter secure the payment to the Company of all indebtedness now or
hereafter owed to the Company by Borrower pursuant to the Note, this Agreement
and any extensions, modifications and renewals thereof.
4. Borrower's Representations and Warranties. Borrower represents
and warrants:
(a) Borrower is (or to the extent that this Pledge Agreement
states that the Collateral is to be acquired after the date hereof, will
be) the sole owner of the Collateral; that the security interest hereunder
in the Collateral is a first, prior and perfected security interest; that
there are no security interests, liens or encumbrances upon, or adverse
claims of title to, or any other interest whatsoever in, the Collateral or
any portion thereof except that created by this Pledge Agreement; and that
no financing statement covering the Collateral or any portion thereof
exists or is on file in any public office; and
2
<PAGE> 3
(b) Borrower has full right, power and authority to enter
into this Pledge Agreement and no consent of, or registration or filing
with, any person or entity, including the California Corporations
Commissioner or any other governmental officer or entity, is required.
5. Covenants of Borrower. Borrower covenants that:
(a) Borrower will deliver to the Company each item of
Collateral hereunder immediately upon Borrower's acquisition thereof, and
will defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein; and
(b) If, while this Pledge Agreement is in effect, any stock
dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation or other change in the capital structure is declared
or made, or proposed to be declared or made, by the Company or any issuer
of the Collateral, all substituted and additional securities issued with
respect to the Collateral shall be endorsed in blank by Borrower promptly
upon receipt thereof or otherwise appropriately transferred to the Company
in negotiable form, and all certificates or instruments evidencing such
securities shall be delivered to the Company to be held under the terms of
this Pledge Agreement in the same manner as and as part of the Collateral.
Borrower shall have the right to exercise any subscription or other rights
with respect to any Collateral, with the prior written approval of such
exercise by the Company; provided, however, that any securities which may
be issued upon exercise of any such rights shall be delivered to the
Company, with any necessary stock power, endorsed in blank and with
signatures guaranteed, to be included in the Collateral.
3
<PAGE> 4
6. Defaults and Remedies.
(a) The occurrence of any one or more of the following
events or conditions affecting Borrower shall constitute a default under
this Pledge Agreement:
(i) Borrower fails to pay any indebtedness, perform
any obligation required to be performed by him, or discharge his
liability to the Company in accordance with the terms of the Note;
or
(ii) Borrower fails to perform any obligation under
this Agreement.
(b) Upon the occurrence of a default hereunder, the Company
may, at its option, without notice to or demand upon Borrower, do any one
or more of the following:
(i) Exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code, specifically
including, without limitation, the right to recover the attorneys'
fees incurred by the Company in the enforcement of this Pledge
Agreement or in connection with Borrower's redemption of the
Collateral;
(ii) Sell the Collateral, or any portion thereof, at
any public or private sale or on any securities exchange or other
recognized market, for cash, upon credit or for future delivery, as
the Company shall deem appropriate;
(iii) Enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to
estop or prevent the Company from pursuing any other or further
remedy it may have, and any repossession or
4
<PAGE> 5
retaking or sale of the Collateral pursuant to the terms hereof
shall not operate to release Borrower until full payment of any
deficiency has been made in cash. Borrower shall reimburse the
Company upon demand for, or the Company may apply any proceeds of
Collateral to, the costs and expenses (including attorneys' fees,
transfer taxes and other charges) incurred by the Company in
connection with any sale, disposition or retention of any Collateral
hereunder.
7. Miscellaneous Provisions.
(a) Notices. Notices, requests and other communications
hereunder shall be in writing and may be delivered personally or sent by
telegram, telex or first class mail to the parties addressed as follows:
To Borrower: Andrew J. Sobel
c/o Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Facsimile:(310) 966-2699
To the Company: Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, CA 90025-1740
Attn: President
Facsimile:(310) 966-2699
Such notices, requests and other communications sent as provided
hereinabove shall be effective when received by the addressee thereof, but
if sent by registered or certified mail, postage prepaid, shall be
effective exactly three (3) business days after being deposited in the
United States mail. The parties hereto may change their addresses by
giving notice thereof to the other parties hereto in conformity with this
section.
5
<PAGE> 6
(b) Headings. The various headings in this Pledge Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Pledge Agreement or any provision hereof.
(c) Choice of Law. This Pledge Agreement shall be construed
in accordance with and all disputes hereunder shall be governed by the
laws of the State of California, without giving effect to the conflicts of
law principals thereof.
(d) Amendments. This Pledge Agreement or any provision
hereof may be changed, waived, or terminated only by a statement in
writing signed by the party against which such change, waiver or
termination is sought to be enforced.
(e) No Waiver. No delay in enforcing or failure to enforce
any right under this Pledge Agreement by the Company shall constitute a
waiver by the Company of such right. No waiver by the Company of any
default hereunder shall be effective unless in writing, nor shall any
waiver operate as a waiver of any other default or of the same default on
a future occasion.
(f) Time of the Essence. Time is of the essence of each
provision of this Pledge Agreement of which time is an element.
(g) Binding Agreement. All rights of the Company hereunder
shall inure to the benefit of its successors and assigns. Borrower shall
not assign any of its interest under this Pledge Agreement without the
prior written consent of the Company. Any purported assignment
inconsistent with this provision shall, at the option of the Company, be
null and void.
6
<PAGE> 7
(h) Definitions. All terms not defined herein shall have the
meaning set forth in the applicable Uniform Commercial Code, except where
the context otherwise requires.
(i) Entire Agreement. This Pledge Agreement, together with
any other agreement executed in connection herewith, is intended by the
parties as a final expression of their agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof.
Acceptance of or acquiescence in a course of performance rendered under
this Pledge Agreement shall not be relevant to determine the meaning of
this Pledge Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
(j) Attorneys' Fees. If any legal action, arbitration or
other proceeding, is brought for the enforcement of this Pledge Agreement,
or because of an alleged dispute, breach or default in connection with any
of the provisions of this Pledge Agreement, each of the parties hereto
shall be responsible for payment of any attorneys' fees and other costs
incurred by them in that action or proceeding, without regard to whomever
is the prevailing party in such action or proceeding.
(k) Severability. If any provision of this Pledge Agreement
should be found to be invalid or unenforceable, all of the other
provisions shall nonetheless remain in full force and effect to the
maximum extent permitted by law.
(l) Power of Attorney. Borrower hereby appoints and
constitutes the Company as Borrower's attorney-in-fact for purposes of (i)
collecting any Collateral, and (ii) conveying any item of Collateral to
any purchaser thereof. This power of attorney is coupled with an interest
and is irrevocable by Borrower. Notwithstanding the foregoing,
7
<PAGE> 8
the Company agrees that it shall not exercise its power of attorney
granted under this Section 7(l) unless and until there is a default under
this Pledge Agreement.
(m) Counterparts. This Pledge Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but
all of which shall together constitute one and the same agreement.
(n) Termination of Pledge. This Pledge Agreement and the
security interest and pledge hereunder shall not terminate until the full
and final payment and performance of all indebtedness and obligations
secured hereunder. At such time, the Company shall reassign and deliver to
Borrower all of the Collateral hereunder which has not been sold, disposed
of, retained or applied by the Company in accordance with the terms
hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Company, and shall be at the expense of Borrower. Without
limiting the generality of the foregoing, the security interest and pledge
hereunder shall not be terminated by the transfer of any of the Collateral
hereunder from the Company to Borrower, or any person designated by
Borrower, for the purpose of ultimate sale, exchange, presentation,
collection, renewal or registration of transfer or for any other purpose.
(o) Release of Collateral. Borrower shall be permitted to
sell any of the shares of Collateral and the Company shall release such
shares from Borrower's pledge hereunder provided, however, that (i) so
long as Borrower has not sold more than the aggregate shares of common
stock of the Company beneficially owned by Borrower on or after the
employment anniversary dates as specified below, (or the Company has
consented in writing to such a sale prior to such sale):
8
<PAGE> 9
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES THAT MAY BE PERCENTAGE OF REMAINING SHARES THAT
ANNIVERSARY SOLD ON OR AFTER ANNIVERSARY MAY BE SOLD ON OR AFTER ANNIVERSARY
<S> <C> <C>
Prior to Third Anniversary None None
Three 15% 15%
Four 25% 40%
Five 30% 70%
Six 30% 100%
</TABLE>
Borrower shall pay to the Company that percentage of the net (after-tax)
proceeds from the sale of such shares equal to the percentage of shares of
common stock of the Company pledged by the Borrower to the Company as
security under this or any other agreement for obligations owing by
Borrower to the Company so sold and provided further, that if as a result
of any such sale the value of the remaining Collateral would be less than
the aggregate amount owing under the Note after such repayment plus any
other obligations of Borrower secured by the Collateral, Borrower shall
pay to the Company the lesser of (x) all of the net (after-tax) proceeds
from such sale and (y) as much of the net (after-tax) proceeds of such
sale as would be required to result in the value of the remaining
collateral being equal to or greater than the aggregate amount owing under
the Note after such repayment plus any other obligations of Borrower
secured by the Collateral and (ii) if Borrower has sold more than the
aggregate shares of common stock of the Company beneficially owned by
Borrower permitted to be sold in accordance with the table set forth above
during any fiscal quarter of the Company, Borrower shall pay to the
Company all of the net (after-tax) proceeds of the sale of such shares.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed the day and year first above written.
9
<PAGE> 10
ARDEN REALTY, INC. BORROWER
By_________________________ _____________________________
Victor J. Coleman Andrew J. Sobel
President
10
<PAGE> 1
EXHIBIT 10.34
EXHIBIT A
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT, dated as of August 14, 1998, is made
by and between Arden Realty, Inc., a Maryland corporation (the "Company"), and
Diana M. Laing an employee of the Company (the "Holder"):
WHEREAS, the Company has established the 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited Partnership (the
"Plan"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Plan provides for the issuance of shares of the Company's
Common Stock (as defined herein) which may be subject to certain restrictions
thereon (hereinafter referred to as the "Restricted Stock"); and
WHEREAS, the Compensation Committee of the Company's Board of Directors
(the "Committee"), has determined that it would be to the advantage and in the
best interest of the Company and its stockholders to obtain and retain the
services of directors, key Employees and Consultants considered essential to the
long range success of the Company by offering them an opportunity to own stock
in the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1. General. Wherever the following terms are used in this Agreement
they shall have the meanings specified below, unless the context clearly
indicates otherwise. Capitalized terms not defined herein shall have the
meanings assigned to such terms in the Plan. The masculine pronoun shall include
the feminine and neuter, and the singular the plural, where the context so
indicates.
1.2. Board. "Board" shall mean the Board of Directors of the Company.
1.3. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.4. Committee. "Committee" shall mean the Compensation Committee of
the Board, or another committee or a subcommittee of the Board, appointed as
provided in Section 9.1 of the Plan.
1.5. Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized
<PAGE> 2
to be issued in the future, but excluding any preferred stock and any warrants,
options or other rights to purchase Common Stock.
1.6. Company. "Company" shall mean Arden Realty, Inc., a Maryland
corporation.
1.7. Company Subsidiary. "Company Subsidiary" shall mean any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing 50 percent or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain. "Company
Subsidiary" shall also mean any partnership in which the Company and/or any
Company Subsidiary owns more than 50 percent of the capital or profits
interests; provided, however, that "Company Subsidiary" shall not include the
Partnership nor any Partnership Subsidiary.
1.8. Director. "Director" shall mean a member of the Board.
1.9. Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.10. Partnership. "Partnership" shall mean Arden Realty Limited
Partnership, a Maryland limited partnership.
1.11. Partnership Subsidiary. "Partnership Subsidiary" shall mean any
partnership in an unbroken chain of partnerships beginning with the Partnership
if each of the partnerships other than the last partnership in the unbroken
chain then owns more than 50 percent of the capital or profits interests in one
of the other partnerships. "Partnership Subsidiary" shall also mean any
corporation in which the Partnership and/or any Partnership Subsidiary owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock.
1.12. Plan. "Plan" shall mean the 1996 Stock Option and Incentive Plan
of Arden Realty, Inc. and Arden Realty Limited Partnership.
1.13. Restricted Stock. "Restricted Stock" shall mean Common Stock
awarded under Article VI of the Plan.
1.14. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.
1.15. Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.16. Subsidiary. "Subsidiary" shall mean any Company Subsidiary or
Partnership Subsidiary.
2
<PAGE> 3
ARTICLE II.
AWARD OF RESTRICTED STOCK
2.1. Award of Restricted Stock. For good and valuable consideration
which the Committee has determined to exceed the par value of its Common Stock,
on the date hereof the Company issues to the Holder 42,533 shares of its Common
Stock upon the terms and conditions set forth in this Agreement.
2.2. Consideration to the Company. In consideration for the issuance of
the Restricted Stock by the Company, Holder hereby executes and delivers to the
Company a Promissory Note, in the original principal amount of $1,000,000 (the
"Note"), in the form of Exhibit "A" attached hereto. As additional
consideration, the Holder agrees to remain in the employ of the Company, the
Partnership, or any Subsidiary (whichever is applicable) with such duties and
responsibilities as the Company, the Partnership or any Subsidiary (as
applicable) shall from time to time prescribe, for a period of at least one year
after the Restricted Stock is issued. Nothing in this Agreement or in the Plan
shall confer upon the Holder any right to continue in the employ of the Company,
the Partnership or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company, the Partnership or any Subsidiary which are hereby
expressly reserved, to discharge the Holder at any time for any reason
whatsoever, with or without cause.
ARTICLE III.
MISCELLANEOUS
3.1. Administration. The Committee shall have the power to interpret
the Plan, this Agreement and all other documents relating to Restricted Stock
and to adopt such rules for the administration, interpretation and application
of this Agreement as are consistent therewith and to interpret, amend or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the Holder,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Restricted Stock and all members of
the Committee shall be fully protected by the Company in respect to any such
action, determination or interpretation. The Board shall have the right to
exercise any of the rights or duties of the Committee under the Plan and this
Agreement except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee.
3.2. Conditions to Issuance of Stock Certificates. The Company shall
not be required to issue or deliver any certificate or certificates for shares
of stock pursuant to this Agreement prior to fulfillment of all of the following
conditions:
3
<PAGE> 4
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The payment by the Holder of all amounts required to be
withheld, under federal, state and local tax laws, with respect to the
issuance of Restricted Stock; and
(c) The lapse of such reasonable period of time as the
Committee may from time to time establish for reasons of administrative
convenience.
(d) The completion of any registration or other qualification
of such shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its
absolute discretion, deem necessary or advisable; and
(e) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable.
3.3. Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of its Secretary, and
any notice to be given to the Holder shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
3.3, either party may hereafter designate a different address for notices to be
given to it or him. Any notice which is required to be given to the Holder
shall, if the Holder is then deceased, be given to the Holder's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 3.3. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
3.4. Rights as Stockholder. Except as otherwise provided herein, upon
delivery of the shares of Restricted Stock to the Holder, the Holder shall have
all the rights of a stockholder with respect to said shares, including the right
to vote the shares and to receive all dividends or other distributions paid or
made with respect to the shares or Restricted Stock.
3.5. Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.
3.6. Conformity to Securities Laws. The Holder acknowledges that the
Plan and this Agreement are intended to conform to the extent necessary with all
provisions of all applicable federal and state laws, rules and regulations
(including but not limited to, the Securities Act and the Exchange Act) and to
such approvals by any listing, regulatory or other governmental authority as
may, in the opinion of counsel for the Company, be necessary or advisable in
connection
5
<PAGE> 5
therewith. Notwithstanding anything herein to the contrary, this Agreement shall
be administered, and the Restricted Stock shall be issued, only in such a manner
as to conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan, this Agreement and the Restricted Stock issued
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
3.7. Amendment. This Agreement and the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time and from time
to time by the committee. No amendment, suspension or termination of the Plan
shall, without the consent of the Holder, alter or impair any rights or
obligations under an Award previously theretofore granted unless expressly
provided therein.
3.8. Governing Law. The laws of the State of Maryland shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
3.9. Section 83(b). The Employee covenants that he will not make an
election under Section 83(b) of the Code with respect to the receipt of any
share of Restricted Stock.
IN WITNESS HEREOF, this Agreement has been executed and
delivered by the parties hereto.
ARDEN REALTY, INC.,
a Maryland Corporation
By:_________________________________
Victor J. Coleman
President
________________________
Holder
________________________
________________________
Address
________________________
5
<PAGE> 1
EXHIBIT 10.35
EXHIBIT A
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT, dated as of August 14, 1998, is made
by and between Arden Realty, Inc., a Maryland corporation (the "Company"), and
Andrew J. Sobel an employee of the Company (the "Holder"):
WHEREAS, the Company has established the 1996 Stock Option and Incentive
Plan of Arden Realty, Inc. and Arden Realty Limited Partnership (the "Plan");
and
WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Plan provides for the issuance of shares of the Company's
Common Stock (as defined herein) which may be subject to certain restrictions
thereon (hereinafter referred to as the "Restricted Stock"); and
WHEREAS, the Compensation Committee of the Company's Board of Directors
(the "Committee"), has determined that it would be to the advantage and in the
best interest of the Company and its stockholders to obtain and retain the
services of directors, key Employees and Consultants considered essential to the
long range success of the Company by offering them an opportunity to own stock
in the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1. General. Wherever the following terms are used in this Agreement
they shall have the meanings specified below, unless the context clearly
indicates otherwise. Capitalized terms not defined herein shall have the
meanings assigned to such terms in the Plan. The masculine pronoun shall include
the feminine and neuter, and the singular the plural, where the context so
indicates.
1.2. Board. "Board" shall mean the Board of Directors of the Company.
1.3. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.4. Committee. "Committee" shall mean the Compensation Committee of
the Board, or another committee or a subcommittee of the Board, appointed as
provided in Section 9.1 of the Plan.
1.5. Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized
<PAGE> 2
to be issued in the future, but excluding any preferred stock and any warrants,
options or other rights to purchase Common Stock.
1.6. Company. "Company" shall mean Arden Realty, Inc., a Maryland
corporation.
1.7. Company Subsidiary. "Company Subsidiary" shall mean any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing 50 percent or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain. "Company
Subsidiary" shall also mean any partnership in which the Company and/or any
Company Subsidiary owns more than 50 percent of the capital or profits
interests; provided, however, that "Company Subsidiary" shall not include the
Partnership nor any Partnership Subsidiary.
1.8. Director. "Director" shall mean a member of the Board.
1.9. Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.10. Partnership. "Partnership" shall mean Arden Realty Limited
Partnership, a Maryland limited partnership.
1.11. Partnership Subsidiary. "Partnership Subsidiary" shall mean any
partnership in an unbroken chain of partnerships beginning with the Partnership
if each of the partnerships other than the last partnership in the unbroken
chain then owns more than 50 percent of the capital or profits interests in one
of the other partnerships. "Partnership Subsidiary" shall also mean any
corporation in which the Partnership and/or any Partnership Subsidiary owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock.
1.12. Plan. "Plan" shall mean the 1996 Stock Option and Incentive Plan
of Arden Realty, Inc. and Arden Realty Limited Partnership.
1.13. Restricted Stock. "Restricted Stock" shall mean Common Stock
awarded under Article VI of the Plan.
1.14. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.
1.15. Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.16. Subsidiary. "Subsidiary" shall mean any Company Subsidiary or
Partnership Subsidiary.
2
<PAGE> 3
ARTICLE II.
AWARD OF RESTRICTED STOCK
2.1. Award of Restricted Stock. For good and valuable consideration
which the Committee has determined to exceed the par value of its Common Stock,
on the date hereof the Company issues to the Holder 42,533 shares of its Common
Stock upon the terms and conditions set forth in this Agreement.
2.2. Consideration to the Company. In consideration for the issuance of
the Restricted Stock by the Company, Holder hereby executes and delivers to the
Company a Promissory Note, in the original principal amount of $1,000,000 (the
"Note"), in the form of Exhibit "A" attached hereto. As additional
consideration, the Holder agrees to remain in the employ of the Company, the
Partnership, or any Subsidiary (whichever is applicable) with such duties and
responsibilities as the Company, the Partnership or any Subsidiary (as
applicable) shall from time to time prescribe, for a period of at least one year
after the Restricted Stock is issued. Nothing in this Agreement or in the Plan
shall confer upon the Holder any right to continue in the employ of the Company,
the Partnership or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company, the Partnership or any Subsidiary which are hereby
expressly reserved, to discharge the Holder at any time for any reason
whatsoever, with or without cause.
ARTICLE III.
MISCELLANEOUS
3.1. Administration. The Committee shall have the power to interpret
the Plan, this Agreement and all other documents relating to Restricted Stock
and to adopt such rules for the administration, interpretation and application
of this Agreement as are consistent therewith and to interpret, amend or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the Holder,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Restricted Stock and all members of
the Committee shall be fully protected by the Company in respect to any such
action, determination or interpretation. The Board shall have the right to
exercise any of the rights or duties of the Committee under the Plan and this
Agreement except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee.
3.2. Conditions to Issuance of Stock Certificates. The Company shall
not be required to issue or deliver any certificate or certificates for shares
of stock pursuant to this Agreement prior to fulfillment of all of the following
conditions:
3
<PAGE> 4
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The payment by the Holder of all amounts required to be
withheld, under federal, state and local tax laws, with respect to the
issuance of Restricted Stock; and
(c) The lapse of such reasonable period of time as the
Committee may from time to time establish for reasons of administrative
convenience.
(d) The completion of any registration or other qualification
of such shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its
absolute discretion, deem necessary or advisable; and
(e) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable.
3.3. Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of its Secretary, and
any notice to be given to the Holder shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
3.3, either party may hereafter designate a different address for notices to be
given to it or him. Any notice which is required to be given to the Holder
shall, if the Holder is then deceased, be given to the Holder's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 3.3. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
3.4. Rights as Stockholder. Except as otherwise provided herein, upon
delivery of the shares of Restricted Stock to the Holder, the Holder shall have
all the rights of a stockholder with respect to said shares, including the right
to vote the shares and to receive all dividends or other distributions paid or
made with respect to the shares or Restricted Stock.
3.5. Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.
3.6. Conformity to Securities Laws. The Holder acknowledges that the
Plan and this Agreement are intended to conform to the extent necessary with all
provisions of all applicable federal and state laws, rules and regulations
(including but not limited to, the Securities Act and the Exchange Act) and to
such approvals by any listing, regulatory or other governmental authority as
may, in the opinion of counsel for the Company, be necessary or advisable in
connection
4
<PAGE> 5
therewith. Notwithstanding anything herein to the contrary, this Agreement shall
be administered, and the Restricted Stock shall be issued, only in such a manner
as to conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan, this Agreement and the Restricted Stock issued
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
3.7. Amendment. This Agreement and the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time and from time
to time by the committee. No amendment, suspension or termination of the Plan
shall, without the consent of the Holder, alter or impair any rights or
obligations under an Award previously theretofore granted unless expressly
provided therein.
3.8. Governing Law. The laws of the State of Maryland shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
3.9. Section 83(b). The Employee covenants that he will not make an
election under Section 83(b) of the Code with respect to the receipt of any
share of Restricted Stock.
IN WITNESS HEREOF, this Agreement has been executed and
delivered by the parties hereto.
ARDEN REALTY, INC.,
a Maryland Corporation
By: ______________________
Victor J. Coleman
President
- ------------------------
Holder
- ------------------------
- ------------------------
Address
- ------------------------
5
