OPTION AGREEMENT APOLLO GROUP, INC., OPTION GRANTOR and MACQUARIE RIVERPOINT AZ, LLC, OPTION HOLDER
Exhibit 10.6
APOLLO GROUP, INC., OPTION GRANTOR
and
MACQUARIE RIVERPOINT AZ, LLC, OPTION HOLDER
THIS OPTION AGREEMENT (this “Agreement”) is made as of June 20, 2006 (the
“Agreement Date”) by and between APOLLO GROUP, INC., an Arizona corporation, a duly
organized and existing Arizona corporation, being hereafter referred to as “Option
Grantor”, and MACQUARIE RIVERPOINT AZ, LLC, a duly organized and existing Delaware limited
liability company, herein referred to as “Option Holder” concerning the sale and assignment
of all of the membership interests of RIVERPOINT LOTS 1/3/5, LLC, a duly organized Arizona limited
liability company (“Riverpoint 1/3/5”) and RIVERPOINT LOT 2, LLC, a duly organized Arizona
limited liability company (“Riverpoint 2”). Riverpoint 1/3/5 and Riverpoint 2 are each
referred to in this Agreement as a “Company” and collectively as the “Companies”.
WHEREAS, Riverpoint 1/3/5 is the owner of that certain real property to be improved, commonly
known as Xxx 0 xxx Xxx 0 xx Xxxxxxxxxx, according to the plat recorded in Book 566 of Maps, page
04, records of Maricopa County, Arizona (“Lots l and 3”), and located at 0000 X. Xxxxxxxxxx
Xxxxxxx and 0000 X. Xxxxxxxxxx Xxxxxxx in Phoenix, Arizona, respectively.
WHEREAS, Riverpoint 2 is the owner of that certain real property to be improved, commonly
known as Lot 2 of Riverpoint, according to the plat recorded in Book 566 of Maps, page 04, records
of Maricopa County, Arizona (“Lot 2”), and located at 0000 X. Xxxxxxxxxx Xxxxxxx in
Phoenix, Arizona. Lots 1 and 3 and Lot 2 are hereinafter referred to as the “Real
Property”. A site plan of the Real Property is attached hereto as Exhibit “A”.
(a) Option Grantor shall cause the Companies to construct the Improvements substantially in
accordance with the Plans and Specifications and all applicable laws. If during the construction
of the Improvements, the Companies desire to, or are required by law or by governmental authorities
with jurisdiction over the Improvements to, make modifications to the Plans and Specifications
(i.e., “Change Orders”), the Companies retain the right to make such Change Orders,
provided that (a) the Companies disclose to Option Holder in writing a complete accounting of all
Change Orders, along with modifications to the Plans and Specifications and/or the construction
contract(s) required to document such Change Order, and (b) if the Change Order is a Material
Change Order, as such term is defined herein, the Companies follow the process outlined below.
“Material Change Orders” is defined herein to mean any changes to the Plans and
Specifications that are not required by law or by governmental authorities with jurisdiction over
the Improvements and that do one or more of the following:
(i) Decrease the overall quality of the materials, workmanship or equipment of the
Improvements, which shall be determined by the project architect in his sole and absolute judgment,
(ii) Increase the frequency of on-going maintenance/replacement or otherwise increase the cost
of on-going maintenance/replacement of materials and equipment for the Improvements,
(iii) Decrease the aesthetic quality of the original architectural design, which shall be
determined by the project architect in his sole and absolute judgment,
(iv) Modify in more than an inconsequential manner any of the Major Components of the central
heating ventilation and air conditioning systems and electrical (power and lighting) capacity.
“Major Components” are thereby defined to include all energy management systems, chillers,
cooling towers, air handler units, main switchboard, main mechanical switchboard and central air
distribution and collection ductwork and equipment. Major Components specifically exclude changes
to air distribution, collection, and energy management components (including ductwork, VAV boxes,
thermostats, etc.) utilized to control, zone and ventilate heated and chilled air on each of the
Improvement’s 10 floors,
(v) Alter the structural design of the Improvements, including but not limited to the seismic
or structural integrity of the Improvement’s foundation, columns, beams, girders, floor slabs and
ceiling joists,
2
(vi) Modify the floor to floor height or floor to ceiling height, other than normal
construction tolerances,
(vii) Modify the exterior wall systems of the Improvements, including design details for the
pre-cast panels, glass, glazing, insulation, flashings and other exterior claddings in such a
manner as to decrease the life expectancy of such components or to increase probability of water
infiltration inside the wall cavity,
(viii) Modify in more than an inconsequential manner the life safety design or life safety
systems of the Improvements, including fire sprinklers, smoke or fire detection systems, emergency
power back-up systems, and fire ingress and egress, or any other design or equipment change which
impacts human life safety,
(ix) Modify the site plan or floor plan in such a manner to decrease the rentable area below
265,000 rentable square feet of the office tower or increase the rentable area above 290,000 (as
measured in accordance with the BOMA Standard defined below) or the number of surface and
structured parking spaces so that the parking ratio is less than 7.5 per 1,000 square feet of
rentable area,
(x) Modify the site plan in such a manner to decrease or in any adverse manner change the
quality or means of ingress or egress to and from the Improvements,
(xi) Modify the specifications to decrease the number of cabs, decrease weight capacities in
more than an inconsequential manner, decrease the cab dimensions, increase response time, decrease
handling capacity or transportation speeds of the elevators, or change the quantity or location of
stair shafts, or
(xii) Modify in any adverse manner any warranty provisions, defect liability periods and/or
warranty maintenance obligations.
If Change Orders made by the Companies are Material Change Orders, the Companies shall provide
to Xxxxx Xxxxxx of Xxxxxxxxx Associates (the “Construction Monitor”) and Xxxx Xxxxxx of
Principal Real Estate Investors, LLC, copies of all documentation received from the General
Contractor and architect to disclose the reason for the change order, including without limitation,
the specific changes to the construction materials, specifications, and methods of installation,
any drawings depicting the Material Change Order, material data sheets, if any, and information
related to the cost of the Material Change Order, if applicable. Upon receipt of such information,
Option Holder shall have two (2) business days to respond to such Material Change Order and
instruct the Companies in writing whether Option Holder approves or disapproves of such Material
Change Order, and if it disapproves the Material Change Order specifying the reasons therefor. A
failure by Option Holder to disapprove a Material Change Order within such two (2) business day
shall be deemed an approval of such Material Change Order. Option Holder’s Construction Monitor
shall have the authority to approve or disapprove all Material Change Orders on behalf of Option
Holder, and the Construction Monitor’s written decisions or failure to act shall be binding on
Option Holder. In the event Option Holder approves the Material Change Order, then the Companies
may implement such Material Change Order, without credit, offset or adjustment to the Purchase
Price.
3
In the event Option Holder disapproves of such Material Change Order, then the Companies shall
either (x) instruct the General Contractor that such change order is not acceptable and complete
the construction substantially in accordance with the original Plans and Specifications (as
modified by any prior Change Orders permitted under this Agreement), (y) make modifications to the
Material Change Order to address the objections specified in the Option Holder’s response and
thereafter repeat the same notice provisions for approval by the Option Holder, (z) make any change
reflected in a Material Change Order that is disapproved pursuant to this Section, in which event
Option Holder’s sole remedy shall be to terminate this Agreement, receive an immediate full refund
of the Option Payment less $75,000, which shall be paid to Option Grantor as consideration for
taking the Membership Interests off the market.
(b) The Companies shall provide the Construction Monitor with reasonable access to the
Improvements to review the status of the construction. At a minimum, Xxxx Xxxxx, or any other
person designated in writing by notice to Option Holder as the project manager for the Companies
(the “Project Manager”), shall update Option Holder as to the construction progress at a
meeting to take place on the next business day following the monthly on-site meeting with the
Project Manager and the General Contractor superintendent; provided that the Project Manager may
reschedule such meeting, but will give the Construction Monitor at least five (5) business days
prior notice. The Project Manager will deliver copies of the meeting minutes for the monthly
on-site meeting and copies of other materials related to such meeting within two (2) business days
following receipt thereof. All visits to the site by the Construction Monitor shall be coordinated
through the Project Manager. The Construction Monitor shall not directly contact the project
superintendent, architect or any other members of the construction team regarding the Improvements
or construction thereof.
Within two (2) business days of Project Manager’s receipt thereof, the Construction Monitor
shall be provided copies of construction documentation exchanged between the General Contractor and
the Project Manager, including:
(i) Copies of updated milestone calendars for completion of the Improvements;
(ii) Copies of any material testing or sample reports (i.e. compaction reports, concrete core
samples, etc.); and
(iii) Copies of any modifications to Plans and Specifications as a result of change orders.
Notwithstanding the foregoing, (i) the Companies shall not be required to provide copies of
any General Contractor applications for payment and (ii) the Companies shall only be required to
furnish copies of all General Contractor or subcontractor lien waivers following the completion of
the Improvements.
The Construction Monitor shall not access the job site at any time without the advance
permission of the Project Manager, which access shall not be unreasonably withheld, delayed or
conditioned. The Construction Monitor shall take all reasonable steps to avoid disruption to the
job site, construction schedule, or superintendent management of the overall construction of the
Improvements and shall follow all reasonable restrictions or limitations imposed by the Project
Manager or the employees at the job site. Option Holder shall indemnify, defend and hold
4
harmless Option Grantor, the Companies, Project Manager and the General Contractor for from
and against any loss, cost, damage or expense as the result of or arising from the Construction
Monitor’s entry onto the Property or exercise of the rights granted under this Section.
Upon completion of the Improvements, the Construction Monitor shall also be afforded an
invitation to attend the construction walk-through along with the Project Manager and the project
superintendent at which a final punch list is prepared. The Construction Monitor’s attendance at
the walk-thru shall be as a silent observer, but following the walk-thru Project Manager shall
schedule a meeting to afford the Construction Monitor any opportunity to provide input into the
documentation of the final punch list. The Construction Monitor’s recommendations regarding final
punch list shall include only items necessary to conform the Improvements to the Plans and
Specifications as modified by Change Orders permitted under this Agreement, and the project
architect shall determine whether the recommended punch list items are necessary to conform the
Improvements to the Plans and Specifications. If the Construction Monitor requests any punch list
item that is inconsistent with or would require changes to the Plans and Specifications, Option
Grantor may accept or reject such item, in its sole and absolute discretion, or may condition its
acceptance of the item on any terms the Companies deem appropriate, including without limitation,
Option Holder agreeing to pay any increased cost resulting from the requested punch list item.
(a) Option Grantor hereby grants to Option Holder, an exclusive and irrevocable right and
option (the “Option”) to purchase the Membership Interests upon and subject to the terms,
conditions and limitations hereafter set forth.
(b) Option Grantor shall notify Option Holder the date that it anticipates that Completion (as
defined in the following sentence) of the Improvements will occur (the “Estimated Completion
Notice”). Option Grantor shall provide written notice to Option Holder (and evidence of the
completion of each thereof) (the “Completion Notice”), within five (5) business days after
the last to occur of (i) final completion of the Improvements substantially in accordance with the
Plans and Specifications; (ii) receipt of a notice of substantial completion from Option Grantor’s
architect; and (ii) issuance of an unconditional final certificate of occupancy from the City of
Phoenix (“Completion”). Option Holder may exercise the Option by giving written notice
(the “Option Exercise Notice”) of the exercise thereof to Option Grantor on or before the
later of (i) five (5) business days following delivery by Option Grantor to Option Holder of the
Completion Notice or (ii) sixty (60) days after the delivery by Option Grantor to Option Holder of
the Estimated Completion Notice (the “Option Exercise Date”).
(c) If the Option Exercise Date has not occurred on or before September 30, 2007 (as the same
may be extended for any Force Majeure Delay), Option Holder, at its absolute discretion and as its
sole remedy, may either (i) terminate this Agreement by written notice and receive an immediate
refund of the Option Payment or (ii) extend from time to time and as often as Option Holder elects
the period for the Option Exercise Date to occur; provided, however, that notwithstanding anything
contained herein to the contrary, in no event shall Option Holder be entitled to extend beyond
March 30, 2008 (the “Outside Expiration Date”). For purposes of this Agreement, a
“Force Majeure Delay” shall mean any delay caused by strike, other labor trouble,
governmental preemption of priorities or other controls in connection with a national or
5
other public emergency, or shortages of fuel, supplies or labor resulting therefrom or any
other cause, similar to the above, beyond a party’s reasonable control. Notwithstanding anything
contained in this Agreement to the contrary, if the Option Exercise Date has not occurred by the
Outside Expiration Date (without regard to any Force Majeure Event), the Option shall lapse, the
Option Payment shall be refunded to Option Holder, and Option Holder shall have no further Option
to purchase the Membership Interests.
(d) The giving of the Option Exercise Notice shall create a valid and binding contract between
Option Grantor, as seller, and Option Holder, as purchaser, whereby seller shall be bound to sell,
and purchaser shall be bound to purchase, the Membership Interests, upon and subject to the terms,
conditions, and limitations set forth in the form of purchase and sale agreement attached hereto as
Exhibit “D” (the “Purchase and Sale Agreement”), which Option Grantor and Option
Holder agree to execute without modification and deliver to the other within five (5) business days
after the exercise of the Option to memorialize such contract.
(e) From and after the date of this Agreement, and until the first to occur of (i) the lapse
or expiration of the Option or (ii) the Closing, Option Grantor shall neither sell, transfer,
convey or otherwise alienate the Membership Interests, and the Companies shall neither sell,
transfer, convey or otherwise alienate the Assets or any part thereof or interest therein, nor
grant or create or suffer the creation of any mortgage, trust deed, lien, charge, or encumbrance of
or on the Assets or any part thereof or interest therein that cannot be and is not released by
Option Grantor at the Closing, nor grant or enter into any lease of the Assets or any part thereof
(other than licenses or subleases that would otherwise be permitted under the terms of the UOP
Lease).
(f) From time to time after the date hereof and prior to Closing, Option Holder shall be
entitled to reasonable access to the Real Property and the Improvements, after prior written notice
to Project Manager; provided that Project Manager may limit such entry to periods when Project
Manager or his designee is available to accompany Option Holder on its entry on to the Property and
may impose reasonable requirements intended to minimize interference with the construction and
insure safety to persons on-site. Option Holder shall not create any liens on the Real Property or
the Improvements by virtue of its access to or entry thereon and will indemnify, defend, and hold
Option Grantor and the Companies harmless for, from and against all loss, cost, damage and expense,
including, but not limited to, claims asserted by third parties against Option Grantor or the
Companies to recover for personal injury or property damage as a result of Option Holder’s entry
onto or activities at the Real Property and Improvements. In the course of its investigations
Option Holder may make reasonable inquiries to third parties, including, without limitation parties
to service contracts, municipal, local and other government officials and representatives, but
excluding architects, contractors and subcontractors in which case communications shall be limited
to those set forth in Section 2, and Option Grantor and the Companies consent to such
inquiries.
(g) Prior to the Agreement Date, the Companies provided to Option Holder the due diligence
materials listed on Exhibit “E” (collectively, the “Due Diligence Items”). Neither
Option Grantor nor the Companies make any representation as to the accuracy of any Due Diligence
Item or the content therein. The Companies are providing such reports to Option Holder for
informational purposes only. In the event the transaction contemplated herein does
6
not close for any reason other than a default by Option Grantor, Option Holder shall promptly
return the Due Diligence Items and any copies thereof to the Companies.
On or before 5:00 p.m. (Central Time) on the date which is the tenth (10th) business day
following the Agreement Date (the “Approval Date”), if Option Holder disapproves of any of
the Due Diligence Items or the Assets, for any reason or for no reason, this Agreement shall
terminate without any liability on the part of either party and the Option shall lapse. In the
event of such termination and lapse, the Option Payment shall be immediately returned to Option
Holder, and Option Holder shall promptly return to the Companies all Due Diligence Items and any
copies of same. If by 5:00 p.m. (Central Time) on the Approval Date Option Holder does not deliver
an approval notice to Option Grantor (the “Approval Notice”), there shall be a conclusive
presumption that Option Holder has disapproved the Due Diligence Items or the Assets, this
Agreement shall terminate without any liability on the part of either party, and the Option Payment
shall be immediately returned to Option Holder. If by 5:00 p.m. (Central Time) on the Approval
Date, Option Holder delivers an Approval Notice, then Option Holder will be deemed to have approved
of the Due Diligence Items and the Assets, Option Holder shall have no further right to terminate
this Agreement and it shall remain in full force and effect, and the Option Payment shall be
non-refundable except as otherwise expressly provided in this Agreement.
(a) In consideration of the granting of the Option by Option Grantor to Option Holder
hereunder, Option Holder shall deposit with the Title Company the sum of Four Million No/100
Dollars ($4,000,000.00) (the “Option Payment”).
(b) The Option Payment shall be paid on or before the date which is three (3) business days
after the Agreement Date, by wire transfer of immediately available funds in U.S. dollars via the
federal bank wire transfer system, to the Phoenix office of First American Title Insurance Company,
Attn: Xxxxx Xxxxxxxx, 0000 X. Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 (telephone:
602/000-0000; fax: 602/000-0000) (the “Title Company”).
(c) The Option Payment shall remain in escrow with the Title Company until first to occur of
(i) the Closing, (ii) the termination of this Agreement or the lapse or termination of the Option
or (iii) the termination of the Purchase and Sale Agreement. The Option Payment shall be invested
by the Title Company as directed by Option Holder, and all earnings thereon shall become part of
the Option Payment and disbursed to the party entitled to receive the Option Payment. If the
transaction contemplated by the Purchase Agreement closes, Option Holder shall receive a credit
against the Purchase Price at Closing in an amount equal to the interest earned on the Option
Payment from the date of deposit with the Title Company through the date of the Closing.
(d) Upon the Approval Date the Option Payment shall be non-refundable to Option Holder, unless
or except if any of the following events shall occur on or before the Closing Date in which event
the Option Payment shall be immediately refunded to Option Holder:
7
(1) This Agreement is terminated pursuant to Section 2(a), Section 3(c),
Section 3(g), Section 9(a) or Section 10(q);
(2) On or after the Agreement Date there shall be (A) a violation of Environmental Law
(defined below) related to the Assets, except where such violation would not have a material
adverse effect or (B) the presence or release of Hazardous Materials (defined below) on or from the
Assets or the migration of Hazardous Materials onto the Assets from adjacent property if such
presence, release or migration is in violation of any Environmental Law unless such violation is
remedied prior to the Option Exercise Date. If Option Grantor discovers that Hazardous Materials
have migrated onto the Assets from adjacent property prior to Closing, Option Grantor shall take
such actions as it deems reasonably appropriate against the adjoining landowner(s) from whose
property the Hazardous Substance originated.
(3) The termination of this Agreement by Option Holder as the result of a filing by or against
Tenant or Option Grantor of a petition for order of relief in bankruptcy for the purpose of
bankruptcy, liquidation or reorganization under any law relating to bankruptcy whether now existing
or hereafter enacted (including, without limitation, any petition filed by or against Tenant under
any one or more of the following Chapters of the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101
1330 as amended: Chapter 7, Chapter 11 or Chapter 13) except that, in the case of a filing against
Tenant or Option Grantor of such a petition, Option Holder may not terminate this Agreement if the
petition is dismissed or discharged on or before sixty (60) days after the filing thereof;
(4) Any condemnation of any portion of the Assets; or
(5) An Exception to Warranty Notice has been given by Option Grantor and Option Holder elects
to terminate this Agreement in accordance with the provisions of Section 8(c) hereof;
If any of the conditions set forth in items (1) through (5) above occur, the Option Deposit
shall be immediately returned to Option Holder; otherwise the Option Payment shall be released to
Option Grantor upon the earlier to occur of (i) the Closing under the Purchase and Sale Agreement
or (ii) the expiration, termination or lapse of the Option pursuant to this Agreement. Following
the exercise of the Option and the execution of the Purchase and Sale Agreement, the parties
respective rights to the Purchase and Sale Agreement shall be governed by the terms of the Purchase
and Sale Agreement.
5. Purchase Price. Subject to the adjustment below, the purchase price at which
Option Grantor, as seller shall sell and the Option Holder, as purchaser, shall purchase the
Membership Interests, pursuant to the contract created by the exercise of the Option (the
“Purchase Price”) shall be $70,800,000.00 (Seventy Million Eight Hundred Thousand and
No/100 US Dollars). The Option Payment also shall be paid to Option Grantor at Closing, and the
Option Holder shall receive a credit against the Purchase Price in an amount equal to the interest
earned on the Option Payment from the date of deposit with the Title Company through the date of
the Closing. The Purchase Price was determined based on the lease revenue to be derived assuming
the office tower constructed as part of the Improvements will contain a net rentable area of
267,949 square feet. Within thirty (30) days following the Estimated
8
Completion Notice, Option Grantor shall provide Option Holder with a certification of the
rentable area of the office tower measured by Xxxxxxxxx Sellers Associates in accordance with
“American National Standard ASNI/BOMA Z65.1-1996: Standard Method for Measuring Floor Area in
Office Buildings” issued by the Building Owners and Managers Association International (the
“BOMA Standard”). The rent under the UOP Lease shall be determined based on the net
rentable area of the Building calculated in accordance with the BOMA Standard, and therefore, the
Purchase Price shall be adjusted at closing to equal the rentable area of the office tower as set
forth in such certification multiplied by $264.23 US dollars.
(a) On the date hereof and again on the Closing Date, Option Grantor hereby represents and
warrants to Option Holder as follows:
(i) Option Grantor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Arizona.
(ii) Each of the Companies is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Arizona.
(iii) The Companies collectively own and hold 100% of all right, title and interest in and to
the Assets.
(iv) Option Grantor is the sole member of each of the Companies and owns 100% of the
Membership Interests. Option Grantor holds all right, title and interest to the Membership
Interests, free of all liens, encumbrances or any other defects of title whatsoever, and the
Membership Interests were not issued in violation of the preemptive rights of any person or any
agreement or laws by which the Option Grantor at the time of issuance was bound. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights, rights of exchange,
rights of redemption, subscriptions, claims, agreements, obligations, convertible or exchangeable
securities or other plans or commitments, contingent or otherwise, relating to the Membership
Interests, except as may be provided in the Operating Agreements of the Companies. Option Grantor
has delivered to Option Holder true, complete and correct copies of the Articles of Organization
and the Operating Agreements of the Companies and the same have
9
not been amended or modified, except as provided, and remain in full force and effect. All of
the rights with respect to the operation or management of the Companies are set forth in such
documents. There are no officers in the Companies.
(v) The execution, delivery and performance by the Option Grantor of this Agreement and the
Purchase and Sale Agreement have been duly and validly approved by all necessary company action and
no other actions or proceedings on the part of the entities constituting Option Grantor are
necessary to authorize this Agreement or the Purchase and Sale Agreement or the transactions
contemplated hereby and thereby. No consent, waiver, approval, or authorization of, or filing,
registration, or qualification with, or notice to, any governmental instrumentality or any other
person or entity is required to be made, obtained, or given by the entities constituting Option
Grantor in connection with the execution, delivery, and performance of this Agreement or the
Purchase and Sale Agreement or, if required, such consent or action has been obtained or taken.
The entities constituting Option Grantor have full power and authority to own and grant the option,
to own and sell the Membership Interests, and to enter into this Agreement and the Purchase and
Sale Agreement and to consummate the transactions contemplated in such documents. This Agreement,
the Purchase and Sale Agreement, and all closing documents executed by Option Grantor which are to
be delivered to Option Holder at the Closing Date are, or at the Closing Date will be, duly
authorized, executed, and delivered by Option Grantor, are, or at the Closing Date will be, legal,
valid, and binding obligations of Option Grantor, enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited, or otherwise affected by the
application of rules of law or general principles of equity governing specific performance,
injunctive relief or other equitable remedies (regardless of whether enforceability is considered
in a proceeding in equity or at law) and by bankruptcy, reorganization, insolvency, moratorium and
other similar laws enacted for the relief of debtors generally, from time to time in effect, and
other similar laws or decisions of courts affecting creditors’ rights or remedies generally, are
sufficient to convey title, and do not violate any provisions of any agreement to which Option
Grantor is a party or to which it is subject.
(vi) The execution and delivery of this Agreement and the Purchase and Sale Agreement, and the
performance by Option Grantor under this Agreement and the Purchase and Sale Agreement, do not and
will not conflict with or result in a breach of (with or without the passage of time or notice or
both) the terms of Option Grantor’s organizational documents, any judgment, order or decree of any
governmental authority binding on Option Grantor, and, to Option Grantor’s knowledge, do not breach
or violate any applicable law, rule or regulation of any governmental authority. The execution,
delivery and performance by Option Grantor under this Agreement and the Purchase and Sale Agreement
will not result in a breach or violation of (with or without the passage of time or notice or both)
the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument to which Option Grantor is a party or by
which Option Grantor is bound or to which the Assets are subject. Neither Option Grantor nor the
Companies have granted any rights, options, rights of first refusal, or any other agreements of any
kind, which are currently in effect, to purchase or to otherwise acquire the Assets or any part
thereof or any interest therein, except for rights under this Agreement and the Purchase and Sale
Agreement or any rights disclosed by the Permitted Exceptions (defined in the Purchase and Sale
Agreement).
10
(vii) To Option Grantor’s knowledge, Option Grantor has not breached any material provision
of, nor is it in default under the terms of, any material contract to which it is a party or under
which it has any rights or by which it is bound. Neither Option Grantor nor the Companies have
received any written notice of any violation of or default under or with respect to any law,
governmental regulation or rule or order of any governmental authority that is applicable in any
way to the business or operation of Option Grantor.
(viii) To Option Grantor’s knowledge, (A) the Assets are free and clear of all liens or
encumbrances other than the Permitted Exceptions (defined in the Purchase Agreement), (B) there are
no public plans or proposals for changes in road grade, access or improvements which would affect
the Assets or result in any general or specific assessment against it other than any expansion of
the I-10 right of way, which is currently in the study phase pursuant to the I-10 Corridor
Improvement Study (the “I-10 Expansion”), and (C) no condemnation proceedings, eminent
domain proceedings or similar actions or proceedings are now pending or threatened against the
Assets. Notwithstanding the foregoing, Option Holder acknowledges that Option Grantor and its
affiliates own other lots in the Riverpoint development that are not part of the Assets (the
“Riverpoint Lots”), and nothing in this Agreement shall limit the right of the owner of
such lots to make any improvements or changes to the Riverpoint Lots. The preceding sentence shall
in no way limit Option Holder’s right, as the possible owner of the Assets, to appear and
participate in any public proceedings related to the Riverpoint Lots.
(ix) To Option Grantor’s knowledge, there is no action, suit or proceeding pending or to
Option Grantor’s knowledge, threatened against the Companies or the Assets.
(x) The Companies are classified as disregarded entities for Federal income tax purposes. The
Companies have not made a “check the box” election to be treated as a corporation for Federal
income tax purposes. All Federal income taxes and state and other tax returns and reports of the
Companies required by law to be filed as of the Closing Date will have been duly filed as of such
date, and all taxes imposed upon the Companies or any of its properties, assets or income which are
due and payable or claimed by any taxing authority to be due and payable have been paid or reserved
for as of the Closing Date, other than taxes, assessments, fees and charges being contested by the
Companies in good faith using appropriate procedures. There are no claims for taxes pending
against the Companies, and there are not now in force any waivers or agreements by the Companies
for the extension of time for the assessment of any tax, nor has any such waiver or agreement been
requested by the Internal Revenue Service (the “Service”) or any other taxing authority.
The federal income tax returns of the Companies have not been examined by the Service. The
Companies have paid or are withholding and will pay when due to the proper taxing authorities all
withholding amounts required to be withheld with respect to all taxes on income, unemployment,
social security or other similar programs or benefits with respect to salary and other compensation
of directors, officers and employees of the Companies, if any.
(xi) Except for the UOP Lease, there will not be any other leases affecting the Assets at the
Closing (other than licenses or subleases permitted under the terms of the UOP Lease).
11
(xii) The Option Grantor will prior to the Closing deliver to Option Holder copies of the
financial statements for each of the Companies as of June 30, 2006 (collectively, the
“Financial Statements”). Each of the Financial Statements has been or will be prepared on
a modified cash basis with depreciable assets being recorded on an income tax basis, and each
presents fairly the financial position of the applicable Company, as of its date and the results of
their operations, as the case may be. Since March 31, 2006, there has been no circumstance, event,
occurrence, change or effect that has had a materially adverse effect on the financial condition of
the Companies, other than, in each case, as a result of (a) changes in general economic conditions
nationally, regionally or within the market in which the Assets are located; and (b) changes in the
real estate industry generally and the office building leasing market specifically. Except as set
forth in the Financial Statements, the Companies have no material liabilities, debts, claims or
obligations, whether accrued, absolute, contingent or otherwise, whether due or to become due,
other than (A) real estate taxes and assessments not yet due and payable, (B) obligations, duties
and responsibilities under items disclosed by the Permitted Exceptions, (C) trade payables in the
ordinary course, (D) obligations, duties and responsibilities under applicable laws and (E) costs
incurred in connection with the construction of the Improvements.
(xiii) Option Grantor has received no notice that the current or intended use of the Assets
violates, or that following completion of the Improvements the Assets will violate, in any material
respect any governmental law, rules, regulations or codes, or any covenants or restrictions
encumbering the Companies or the Assets.
(xiv) Except as disclosed in writing to Option Holder or as disclosed in the environmental
reports, if any, pertaining to the Assets provided by Option Grantor, or received by Option Holder
as a result of Option Holder’s tests, Option Grantor has no knowledge of (1) any violation of
Environmental Laws related to the Assets, except where such violation would not have a material
adverse effect or (2) the presence or release of Hazardous Materials on or from the Assets in
violation of any Environmental Law. The term “Environmental Laws” includes without
limitation the Resource Conservation and Recovery Act and the Comprehensive Environmental Response
Compensation and Liability Act and other federal laws governing the environment as in effect on the
date of this Agreement or such later date as of which this representation is effective pursuant to
the terms hereof, together with their implementing regulations and guidelines as of the date of
this Agreement or such later date as of which this representation is effective pursuant to the
terms hereof, and all state, regional, county, municipal and other local laws, regulations and
ordinances that are equivalent or similar to the federal laws recited above or that purport to
regulate Hazardous Materials. The term “Hazardous Materials” includes petroleum, including
crude oil or any fraction thereof, natural gas, natural gas liquids, liquified natural gas, or
synthetic gas usable for fuel (or mixtures of natural gas or such synthetic gas), and any
substance, material waste, pollutant or contaminant listed or defined as hazardous or toxic under
any Environmental Laws.
(xv) Other than this Agreement, the documents delivered pursuant hereto, matters disclosed in
the title policy and title commitment, the UOP Lease and such other contracts and agreements
disclosed to Option Holder (including, but not limited to the construction contracts related to
construction of the Improvements), to Option Grantor’s
12
knowledge, there are no material contracts or agreements of any kind relating to the Companies
or the Assets to which Option Holder or the Companies will be bound after the Closing Date.
(xvi) As of the date of this Agreement, Option Holder is not aware of any circumstances that
would require the treatment of the transaction contemplated by this Agreement as a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4) and therefore does not
presently intend to treat the transaction as such. If in the future, the IRS publishes any
guidance that describes this transaction, or any substantially similar transaction, as being a
“listed transaction” (within the meaning of Treasury Regulation Section 1.6011-4), or if there is
any change in law that requires Option Holder to treat this transaction as a “reportable
transaction,” Option Holder reserves the right to treat this transaction as such.
(xvii) Neither the Tenant, nor the Companies, nor the Option Grantor has (i) made a general
assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by its respective creditors which is not dismissed
within sixty (60) days, (iii) suffered the appointment of a receiver to take possession of all or
substantially all of its respective assets, (iv) suffered the attachment or other judicial seizure
of all, or substantially all, of its respective assets, (v) admitted in writing its inability to
pay their respective debts as they become due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.
(xviii) The Operating Agreements of the Companies are in full force and effect, a true and
correct copy thereof was delivered to Option Holder with the Due Diligence Items and there are no
dissolution, termination or liquidation proceedings pending or contemplated with respect to the
Companies or, prior to the Closing, Option Grantor.
(xix) Other than Lot 5 (defined in Section 11 below), the Companies have no business
and have engaged in no activity other than the direct ownership and operation of the Real Property
and construction of the Improvements and have never leased or owned, directly or indirectly, any
other real property other than the Real Property, and the Companies have not conveyed any interest
in the Real Property to any third party since the date the Title Policy (defined on Exhibit
“E”) was issued.
(xx) Neither Option Grantor nor the Companies have received any written notice of any casualty
with respect to the Assets.
(xxi) To Option Grantor’s knowledge, the Companies have not been cited, fined or otherwise
noticed of any asserted past or present failure to comply with any laws, regulations or orders
relating to the Assets which have not been cured and to Option Grantor’s knowledge, no proceeding
with respect to any such violation is pending or threatened.
(xxii) For federal and state income tax purposes, the Assets has been treated as owned by
Option Grantor.
(xxiii) Neither Option Grantor nor the Companies are (a) currently identified on the Specially
Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control,
Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC
pursuant to any authorizing statute, executive order or
13
regulation (collectively, the “List”), and (b) a person or entity with whom a citizen
of the United States is prohibited to engage in transactions by any trade embargo, economic
sanction, or other prohibition of United States law, regulation, or Executive Order of the
President of the United States. None of the funds or other assets of the Companies constitute
property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as
hereinafter defined), and (c) the members and managers of the Companies are not Embargoed Persons.
(xxiv) Neither of the Companies is required to file reports pursuant to Sections 12(g) or
15(d) of the Securities Exchange Act of 1934, as amended.
(xxv) There are no claims pending, or to the Option Grantor’s knowledge, threatened, against
any manager, officer, employee or agent of either Company or any person which could give rise to
any claim for indemnification against either of the Companies.
(xxvi) Neither of the Companies has ever had any, nor currently has, any employees. Neither
of the Companies is a party to, nor maintains, any employee benefit plan or employee welfare plan
(within the meaning of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)), and none of the Subsidiaries has any obligation to contribute to any
multi-employer plan (within the meaning of ERISA).
(xxvii) Neither of the Companies own, control or hold with the power to vote, directly or
indirectly, any shares of capital stock or beneficial interest in any corporation, partnership,
limited liability company, association, joint venture or other entity.
The term “Embargoed Person” means any person, entity or government subject to trade
restrictions under the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder with the result that the investment in Option Grantor is prohibited by law
or Option Grantor is in violation of law.
This Section shall not apply to any person to the extent that such person’s interest in Option
Grantor is through a U.S. Publicly-Traded Entity. As used in this Agreement, “U.S.
Publicly-Traded Entity” means a Person (other than an individual) whose securities are listed
on a national securities exchange, or quoted on an automated quotation system, in the United
States, or a wholly-owned subsidiary of such a person.
To the extent that any of the representations and warranties made by Option Grantor pursuant
to this Section 8 or elsewhere in this Agreement are made to Option Grantor’s knowledge,
Option Holder acknowledges and agrees that such representations and warranties are based on the
actual (as distinguished from implied, imputed or constructive) knowledge of Xxxxxxx X. Xxxxxx and
Xxxx Xxxxx as of the date of the Agreement and that such individuals have made such representations
and warranties without making, or being under any duty to make, any investigation or inquiry
whatsoever with respect thereto. Option Holder acknowledges that Xx. Xxxxxx and Xx. Xxxxx are
named solely for the purpose of defining and narrowing the scope of Option Grantor’s knowledge and
not for the purpose of imposing any liability on or creating any duties running from such
individual to Option Holder. Option Holder covenants that it will bring
14
no action of any kind against such individual, and in no event shall Xx. Xxxxxx or Xx. Xxxxx
be personally liable for any representation or warranty contained herein.
(b) Option Holder hereby represents and warrants to Option Grantor as of the Agreement Date
and again as of the Closing Date as follows:
(i) Option Holder is a limited liability company, duly organized and validly existing under
the laws of the State of Delaware and will at Closing be qualified to do business in the State of
Arizona.
(ii) The execution, delivery and performance by Option Holder of this Agreement and the
Purchase and Sale Agreement have been duly and validly approved by all necessary corporate or other
applicable action. No consent, waiver, approval, or authorization of, or filing, registration, or
qualification with, or notice to, any governmental instrumentality or any person or entity is
required to be made, obtained, or given by Option Holder in connection with the execution,
delivery, and performance of this Agreement or the Purchase and Sale Agreement or, if required,
such consent or action has been obtained or taken. Option Holder has full power and authority to
enter into this Agreement and the Purchase and Sale Agreement and to consummate the transactions
contemplated in such documents. This Agreement, the Purchase and Sale Agreement and all documents
executed by Option Holder which are to be delivered to Option Grantor at the Closing Date are, or
at the Closing Date will be, duly authorized, executed, and delivered by Option Holder, and are, or
at the Closing Date will be, legal, valid, and binding obligations of Option Holder enforceable
against Option Holder in accordance with their respective terms, except to the extent that the
enforceability thereof may be limited, or otherwise affected by the application of rules of law or
general principles of equity governing specific performance, injunctive relief or other equitable
remedies (regardless of whether enforceability is considered in a proceeding in equity or at law)
and by bankruptcy, reorganization, insolvency, moratorium and other similar laws enacted for the
relief of debtors generally, from time to time in effect, and other similar laws or decisions of
courts affecting creditors’ rights or remedies generally, and do not and at the Closing Date will
not violate any provisions of any agreement to which Option Holder is a party or to which it is
subject.
(iii) Option Holder shall furnish all of the funds for the purchase of the Option (other than
funds, if any, supplied by institutional lenders which will hold valid mortgage liens against the
Property) and such funds will not be from sources of funds or properties derived from any unlawful
activity.
(iv) Option Holder does not intend to treat the transaction contemplated by the Purchase and
Sale Agreement as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4).
(v) Option Holder is a sophisticated investor with substantial experience in investing in
assets of the same type as the Membership Interests and the Assets and has such knowledge and
experience in financial and business matters that Option Holder is capable of evaluating the merits
and risks of an investment in the Membership Interests.
(vi) The execution and delivery of this Agreement and the Purchase and Sale Agreement, and the
performance by Option Holder under this Agreement and the
15
Purchase Agreement, do not and will not conflict with or result in a breach of (with or
without the passage of time or notice or both) the terms of any of Option Holder’s organizational
documents, any judgment, order or decree of any governmental authority binding on Option Holder,
and, to Option Holder’s knowledge, do not breach or violate any applicable law, rule or regulation
of any governmental authority. The execution, delivery and performance by Option Holder under this
Agreement and the Purchase and Sale Agreement will not result in a breach or violation of (with or
without the passage of time or notice or both) the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other material agreement or
instrument to which Option Holder is a party or by which Option Holder is bound.
(vii) Option Holder has not (i) made a general assignment for the benefit of creditors, (ii)
filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by
its creditors, (iii) suffered the appointment of a receiver to take possession of all or
substantially all of its assets, (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets, (v) admitted in writing its inability to pay its debts as they
become due, or (vi) made an offer of settlement, extension or composition to its creditors
generally.
(viii) Option Holder and each member of Option Holder (a) is not currently identified on the
List, and (b) is not a person or entity with whom a citizen of the United States is prohibited to
engage in transactions by any trade embargo, economic sanction, or other prohibition of United
States law, regulation, or Executive Order of the President of the United States. None of the
funds or other assets of Option Holder constitute property of, or are beneficially owned, directly
or indirectly, by any Embargoed Person, and (c) the members and managers of Option Holder are not
Embargoed Persons.
This Section shall not apply to any person to the extent that such person’s interest in Option
Holder is through a U.S. Publicly-Traded Entity.
(c) If at any time after the date of this Agreement, either party learns of any facts or
circumstances which would render any of the foregoing representations and warranties untrue, then
such party shall promptly notify the other party of all such facts and circumstances (an
“Exception to Warranty Notice”) and the party receiving such notice shall, within five (5)
business days following receipt of an Exception to Warranty Notice have the right, as its sole and
exclusive remedy, to elect to (i) terminate this Agreement, and if Option Holder is the party
receiving the Exception to Warranty Notice, it shall be entitled to receive an immediate refund of
the Option Payment (otherwise the Option Payment shall be released to Option Grantor at Closing in
accordance with the Purchase and Sale Agreement); or (ii) waive any claim against the party
providing such notice arising out of or related to the information disclosed in the Exception to
Warranty Notice and proceed with the transaction, in which case the representation or warranty
shall be deemed modified as necessary to conform with the additional information disclosed in the
Exception to Warranty Notice. If any party receiving an Exception to Warranty Notice fails to
timely elect in writing to terminate this Agreement within the five (5) business day period as set
forth above in this Section 8(c), it shall be deemed an election to proceed in accordance
with clause (i) above.
16
(a) If Option Grantor shall be in default hereunder, Option Holder shall deliver a written
notice to Option Grantor on or before the Closing stating with particularity the alleged default of
Option Grantor and the action required by Option Grantor to cure such default, whereupon Option
Grantor shall have ten (10) days after receipt of such written notice in which to cure the alleged
default (and the Closing Date shall be delayed, if necessary, until the end of such ten (10) day
period), and in the event such default is not cured within such ten (10) day period, Option Holder
may elect to either: (i) waive such default by Option Grantor or (ii) terminate this Agreement by
written notice to Option Grantor, in which case the Option Payment shall be returned to Option
Holder, Option Grantor shall reimburse Option Holder for Option Holder’s out-of-pocket due
diligence costs to third parties upon presentation to Option Grantor of actual third party
invoices, not to exceed $500,000; or (iii) enforce specific performance of this Agreement;
provided, however, that any such action must be filed and served not later than ninety (90) days
after the Closing Date, or the remedy of specific performance shall be deemed waived; and further
provided that if specific performance is not a legally available remedy because Option Grantor has
conveyed the Membership Interests to a third party other than Option Holder or the Companies have
conveyed title to the Property to a third party other than Option Holder, then Option Holder shall
be entitled to exercise any and all other remedies available at law or in equity. In no event
(other than under the provision to clauses (ii) and (iii) above) shall Option Grantor be liable to
Option Holder for any actual, punitive, speculative, consequential or other damages. Nothing in
this Section shall limit Option Holder’s rights to indemnification specifically set forth in this
Agreement or Option Holder’s right to recover from Option Grantor costs and fees set forth in
Section 10(g).
(b) If Option Holder breaches this Agreement, Option Grantor’s sole and exclusive remedy will
be to terminate this Agreement, such termination to be effective immediately upon Option Grantor
giving written notice of termination to Option Holder. Upon such termination, Option Grantor will
be entitled to receive the Option Payment, as liquidated damages and not as a penalty, the parties
agreeing and stipulating that the exact amount of damages would be extremely difficult to ascertain
and that the Option Payment constitutes a reasonable and fair approximation of such damages.
Nothing in this Section shall limit Option Grantor’s rights to indemnification specifically set
forth in this Agreement or Option Grantor’s right to recover from Option Holder costs and fees set
forth in Section 10(g).
(a) Notices. Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed to be an adequate and sufficient notice if given in writing and
service is made either by (i) personal delivery, in which case the service shall be deemed received
the date of such personal delivery, (ii) nationally recognized overnight air courier service, next
day delivery, prepaid, in which case the notice shall be deemed to have been received one (1)
business day following delivery to such nationally recognized overnight air courier service, or
(iii) at the time of being sent by facsimile if delivery thereof is confirmed by sender’s receipt
of a transmission report, generated by sender’s facsimile machine, which confirms that the
facsimile was successfully transmitted in its entirety and provided the facsimile
17
was forwarded prior to 5:00 pm at the location of the recipient, and to the following
addresses or facsimile numbers:
If to Option Grantor or the Companies:
c/o Apollo Development Company
4615 East Xxxxxx Street, MSC 900086,
Xxxxxxx, Xxxxxxx 00000,
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
4615 East Xxxxxx Street, MSC 900086,
Xxxxxxx, Xxxxxxx 00000,
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxx
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to Option Holder:
Principal Real Estate Investors, LLC
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attn: Xxxxx Xxxxxxxx
Fax: 000-000-0000
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attn: Xxxxx Xxxxxxxx
Fax: 000-000-0000
With a copy to:
Macquarie Real Estate, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxxxx
Fax: 000-000-0000
Xxx Xxxxx Xxxxxx Xxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxxxx
Fax: 000-000-0000
With a copy to:
Mayer, Brown, Xxxx & Maw LLP
00 X Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
Fax: 000-000-0000
00 X Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
Fax: 000-000-0000
or such other address as either party may from time to time specify in writing to the other.
18
(b) Brokers and Finders. If Option Holder exercises the Option and purchases the
Membership Interests under the Purchase and Sale Agreement, Option Grantor shall pay a commission
in accordance with the terms of the Purchase and Sale Agreement.
(c) Successors and Assigns. Except as set forth in this Section, this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns. Without being relieved of any liability under this Agreement,
Option Holder reserves the right to acquire the Membership Interests in any entity controlled by,
controlling or under common control with Option Holder, upon written notice to Option Grantor given
at least five (5) business days prior to the Closing Date. Except as set forth in the preceding
sentence, Option Holder may not assign its rights hereunder to any person or entity without Option
Grantor’s prior written consent, which may be conditioned or withheld in Option Grantor’s sole and
absolute discretion. Any assignment consented to by Option Grantor shall not relieve Option Holder
of Option Holder’s continuing covenants and obligations under this Agreement. Any purported
assignment of Option Holder’s rights hereunder that does not comport with the foregoing shall be
strictly prohibited and shall be deemed void. Except as set forth in the following sentence,
Option Grantor may not assign any of its rights hereunder to any person or entity without Option
Holder’s prior written consent, which may be conditioned or withheld in Option Holder’s sole and
absolute discretion.
(d) Amendments and Terminations. Except as otherwise provided herein, this Agreement
may be amended or modified by, and only by, a written instrument executed by Option Grantor and
Option Holder.
(e) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Arizona.
(f) Merger of Prior Agreements. This Agreement supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
(g) Enforcement. In the event either party hereto fails to perform any of its
obligations under this Agreement or in the event a dispute arises concerning the meaning or
interpretation of any provision of this Agreement, the defaulting party or the party not prevailing
in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other
party in enforcing or establishing its rights hereunder, including, without limitation, court costs
and reasonable attorneys’ fees. Option Holder and Option Grantor both acknowledge each has been
advised by counsel as to their respective rights, duties and obligations in this Agreement and have
had ample opportunity to negotiate same. Thus, both Option Holder and Option Grantor acknowledge
that any ambiguity in this Agreement should not necessarily be resolved against the drafter of this
Agreement.
(h) Time of the Essence. Time is of the essence of this Agreement.
(i) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, but such counterparts when taken together shall constitute but one
Agreement.
19
(j) Survivability. All representations and warranties by the respective parties
contained herein or made in writing pursuant to this Agreement are intended to and shall remain
true and correct as of the time of Closing, shall be deemed to be material, and shall survive the
execution and delivery of this Agreement for a period of one (1) year from the Closing Date except
that all representations and warranties related to taxes, including, without limitation Section
8(a)(x), shall survive for a period equal to thirty (30) days after the applicable statute of
limitation expires. All statements contained in any certificate or other instrument delivered at
any time by or on behalf of Option Grantor in connection with the transaction contemplated hereby
shall constitute representations and warranties hereunder.
(k) Memorandum of Option. Concurrently with the execution of this Agreement, Option
Grantor, Option Holder and the Companies shall execute a recordable Memorandum of Option in the
form attached hereto as Exhibit “F” (the “Memorandum”). Option Holder is hereby
authorized to record such Memorandum in the public records of the County and State where the Assets
are located. At the time of any bona fide termination of Option Holder’s rights under this
Agreement, Option Holder shall execute and record a document evidencing such termination.
Contemporaneously with the execution of this Agreement, Option Holder shall execute and deliver to
Title Company, a Notice of Termination of Option and Quit-Claim Deed in the form attached hereto as
Exhibit “G” (the “Termination”), releasing any and all interests of Option Holder
under the Memorandum. If the Option expires or lapses or is terminated, Option Grantor may
instruct Title Company in writing (with a copy to Option Holder) that the Termination is to be
recorded and unless Option Holder notifies Title Company within ten (10) days following receipt of
such instruction that it disputes that the Option has expired, lapses or terminate, then Title
Company shall (a) insert the recording information for the Memorandum in the Termination, and then
(b) record the Termination in the official records of Maricopa County, Arizona, and Option Holder
expressly and irrevocably releases Title Company from liability for doing so to the extent done in
good faith. In addition, at the time of the termination of Option Holder’s rights under this
Agreement, at Option Grantor’s reasonable request, Option Holder shall also execute and record any
other documents evidencing such termination.
(l) Proper Execution. The submission by Option Grantor to Option Holder of this
Agreement in unsigned form shall have no binding force and effect, shall not constitute an option,
and shall not confer any rights or impose any obligations upon either Option Holder or Option
Grantor irrespective of any reliance thereon, change of position or partial performance until both
Option Holder and Option Grantor shall have executed and delivered to the other party this
Agreement.
(m) Exclusivity. Option Grantor agrees to not actively solicit offers to purchase the
Membership Interests and agrees to prohibit the Companies from actively soliciting offers to
purchase the Assets or any portion thereof, from other prospective purchasers on or after the
execution date of this Agreement, unless Option Holder defaults under the terms of this Agreement,
or either party terminates this Agreement according to the terms contained herein or Option Holder
fails to exercise the Option prior to the Option Exercise Date.
(n) Personal Liability. There shall be no personal liability imposed on the
individuals who have executed this Agreement (or the attached exhibits).
20
(o) Time Periods. Except as expressly provided for in this Agreement, the time for
performance of any obligation or taking any action under this Agreement will be deemed to expire at
5:00 p.m. (Central Time) on the last day of the applicable time period provided for in this
Agreement. If the time for the performance of any obligation or taking any action under this
Agreement expires on a Saturday, Sunday or legal holiday, the time for performance or taking such
action will be extended to the next succeeding day which is not a Saturday, Sunday or legal
holiday.
(p) Publicity. Prior to the Closing, Option Holder and Option Grantor shall refrain
from generating or participating in a publicity statement for an audience other than Option
Holder’s existing or prospective capital clients, a press release or other public notice regarding
this transaction or designed to inform third parties of this transaction or the terms hereof unless
(i) such statement is jointly issued or approved by the parties or (ii) is required under
applicable laws, rules, regulations or ordinances or by order of a court or other tribunal having
jurisdiction over such disclosure and prior written notice to the other party is given at least 24
hours in advance of the date of such press release or public notice or (iii) is required to enforce
the terms of this Agreement. Regardless of whether any statement is issued prior to the Closing
(by or with the approval of both parties) or following the Closing, it shall reflect that the sale
involves the transfer of the Membership Interests and not the Assets This provision shall survive
the Closing.
(q) Conditions. Option Holder’s obligations under this Agreement are contingent upon
the approval of the Investment Committee of Principal Real Estate Investors, LLC and the board of
directors of Macquarie Office Trust (the “Transaction Approvals”). Option Grantor
acknowledges Option Holder will not seek the Transaction Approvals until the Approval Date has
passed and Option Holder has failed to exercise its right of termination of this Agreement. Option
Holder makes no representation with regard to the likelihood of obtaining the Transaction
Approvals. Option Holder shall have a period of ten (10) business days after the Approval Date to
obtain the Transaction Approvals. If for any reason the Investment Committee or board of directors
does not approve this Agreement or the transaction contemplated herein, this Agreement shall
terminate, the Title Company shall return the Option Payment to Option Holder and neither party
shall have any further obligations or rights hereunder. If Option Holder fails to notify Option
Grantor and Title Company prior to the expiration of such 10 business day period that the
Transaction Approvals have been obtained, then Option Holder shall be deemed not to have obtained
the Transaction Approvals, this Agreement shall terminate, the Title Company shall return the
Option Payment to Option Holder and neither party shall have any further obligations or rights
hereunder except as expressly set forth herein.
(r) Like-Kind Exchange. Option Holder and Option Grantor agree that, at either
party’s election, the sale of the Membership Interests shall be structured as an exchange of
like-kind properties under Section 1031 of the Internal Revenue Code of 1986, as amended (the
“Code”), and the regulations and proposed regulations thereunder. The parties agree that
such election, must be made at least five (5) business days prior to the Closing Date and shall not
extend the Closing Date. If such an election is made by one of the parties hereto, the
non-electing party shall reasonably cooperate with the electing party. The electing party shall in
all events be responsible for all costs and expenses related to the Section 1031 exchange and shall
fully indemnify, defend and hold the non-electing party harmless from and against any and all
21
liability, claims, damages, expenses (including reasonable attorneys’ and paralegal fees and
reasonable attorneys’ and paralegal fees on appeal), proceedings and causes of action of any kind
or nature whatsoever arising out of, connected with or in any manner related to such 1031 exchange
that would not have been incurred by the non-electing party if the transaction were a purchase for
cash. The provisions of the immediately preceding sentence shall survive closing and the transfer
of title to the Membership Interests to Option Holder. Notwithstanding anything to the contrary
contained in this paragraph, any such Section 1031 exchange shall be consummated through the use of
a facilitator or intermediary so that the non-electing party shall in no event be requested or
required to acquire title to any property other than the Membership Interests.
(a) In addition to Xxxx 0 xxx 0, Xxxxxxxxxx 0/0/0 xxxx Xxx 0 xx Xxxxxxxxxx, according to the
plat recorded in Book 566 of maps, page 04, records of Maricopa County, Arizona (“Lot 5”).
Prior to the Closing, Riverpoint 1/3/5 shall convey Lot 5 to Option Grantor or to another entity
designated by Option Grantor (the “Lot 5 Owner”), and shall assign, convey or otherwise
transfer to the grantee of Lot 5 the following:
(i) Tracts A through L, Riverpoint, according to Book 566 of Maps, page 04, records of
Maricopa County, Arizona (the “Median Tracts”);
(ii) all of Riverpoint 1/3/5’s right, title and interest in any rights, privileges and
easements appurtenant to Lot 5 and the Median Tracts, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances as well as all development rights, air rights, water,
water rights (and water stock, if any) relating to Lot 5 and the Median Tracts and owned by
Riverpoint 1/3/5 and any easements, rights-of-way or other appurtenances used in connection with
the beneficial use and enjoyment of Lot 5 or the Median Tracts;
(iii) all of Riverpoint 1/3/5’s right, title and interest in any improvements then-located on
Lot 5 and the Median Tracts, including, without limitation, all buildings and structures located on
Lot 5 and the Median Tracts, all apparatus, equipment and appliances used in connection with the
operation or occupancy of Lot 5 and the Median Tracts, such as heating and air conditioning systems
and facilities used to provide any utility services, refrigeration, ventilation, garbage disposal,
recreation or other services on Lot 5 and the Median Tracts;
(iv) all of Riverpoint 1/3/5’s right, title and interest in any apparatus, equipment or
appliances which are a part of the improvements on Lot 5 and the Median Tracts;
(v) the Riverpoint 1/3/5’s interest in any contracts or agreements, utility contracts or other
rights relating to the ownership of Lot 5 and the Median Tracts, the improvements on any Lot 5 and
the Median Tracts or the Lot 5 personal property;
(vi) the rights and obligations as “Declarant” under the Declaration of Covenants, Conditions,
Easements and Restrictions for Riverpoint Business Park (the “CC&Rs”), including, but not
limited to, the rights and obligations held by Declarant as the Approving Agent and as the
Operator, as such terms are defined therein;
22
(vii) the rights and obligations of Riverpoint 1/3/5 under that certain Lease (No. 84051-001)
dated January 1, 2004, by and between Riverpoint 1/3/5, as landlord, and the City of Phoenix, as
tenant (the “Lift Station Lease”); and
(viii) the rights and obligations of Riverpoint 1/3/5 under that certain City of Phoenix,
Arizona Revocable Permit No. RP-04002-05-I, issued by the City of Phoenix Street Transportation
Department to Riverpoint 1/3/5, as permittee, recorded on March 12, 2004 as Document No.
2004-0255408 in the Official Records of Maricopa County Recorder and that certain City of Phoenix
Street Improvements Maintenance Agreement MH-04002, by and between the City of Phoenix, an Arizona
municipal corporation, and Riverpoint Lots 1/3/5, LLC, an Arizona limited liability company, dated
March 5, 2004, and recorded on March 12, 2004 as Document No. 2004-0255409 in the Official Records
of Maricopa County Recorder (collectively the “City Permits”).
(Lot 5 and the items described in items (i) through (viii) above are referred to at the “Lot 5
Property.”
(b) Lot 5, the Median Tracts and any improvements thereon and rights appurtenant thereto shall
be conveyed by special warranty deed to the Lot 5 Owner; provided, however, that notwithstanding
any warranty of title set forth in the special warranty deed or otherwise, Riverpoint 1/3/5 shall
only be liable for a breach such warranty or any other claim relating to the status of title for
the Lot 5 Property to the extent that coverage for such claim is available under the Title Policy,
it being understood and agreed that the parties intend that Riverpoint 1/3/5 will not have any
obligation to pay for or reimburse the Lot 5 Owner for any claims relating to a breach of warranty
of title other than out of proceeds actually received by Riverpoint 1/3/5 from the Title Policy.
(c) In connection with the assignment of the Membership Interests to Option Holder, Option
Grantor shall indemnify, defend and hold harmless Option Holder for from and against all claims
related to the ownership by Riverpoint 1/3/5 of the Lot 5 Property, including, but not limited to
claims related to or arising out of (i) the construction of improvements on Lot 5, and (ii) any
actions undertaken by Riverpoint 1/3/5 as the Declarant under the CC&Rs; (iii) the ownership and
maintenance of the Median Tracts; (iv) the Lift Station Lease; or the (v) the City Permits. This
indemnity shall survive the Closing.
(d) Option Grantor reserves the right to change the name of Riverpoint 1/3/5 to “Riverpoint
Lots 1/3, LLC” prior to Closing.
[ Remainder of
page intentionally left blank; signature page follows.]
23
| Option Holder: MACQUARIE RIVERPOINT AZ, LLC, a Delaware limited liability company | ||||
| By: | Macquarie Office (US) No. 2 Corporation, a Minnesota corporation, its sole member and manager | |||
| By: | /s/ Xxxxx Xxxxx | |||
| Its: Chief Executive Officer | ||||
| Option Grantor: APOLLO GROUP, INC., an Arizona corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Its: Authorized Officer | ||||
| ACCEPTED AND APPROVED: RIVERPOINT LOTS 1/3/5, LLC, an Arizona limited liability company | ||||
| By: | Apollo Group, Inc., its sole member and manager | |||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Its: Chief Financial Officer | ||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Its: Authorized Officer | ||||
24
| RIVERPOINT LOT 2, LLC, an Arizona limited liability company | ||||
| By: | Apollo Group, Inc., its sole member and manager | |||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Its: Chief Financial Officer | ||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Its: Authorized Officer | ||||
JOINDER
Macquarie Office (US) No 2 Corporation, a
Minnesota corporation joins in and executes this
Agreement solely for the purpose of guaranteeing
Option Holder’s obligations to indemnify, defend
and hold harmless Option Grantor pursuant to
Sections 2(b) and 3(f) of this
Agreement and for the payment of costs and fees
pursuant to Section 10(g), only to the
extent that any of such obligations are not
covered by insurance proceeds and not to exceed
the amount of $500,000.
Macquarie Office (US) No 2 Corporation, a
Minnesota corporation.
| By: | /s/ Xxxxx Xxxxx | |||
| Its: Chief Executive Officer | ||||
25
TABLE OF CONTENTS
| Page | ||||||
1. |
Recitals | 2 | ||||
2. |
Construction of Improvements; Material Change Orders | 2 | ||||
3. |
Option to Purchase | 5 | ||||
4. |
Option Payment | 7 | ||||
5. |
Purchase Price | 8 | ||||
6. |
Assignment of Membership Interests | 9 | ||||
7. |
The Closing | 9 | ||||
8. |
Representations and Warranties | 9 | ||||
9. |
Remedies | 16 | ||||
10. |
Miscellaneous | 17 | ||||
11. |
Lot 5 | 21 | ||||
-i-
